Ic3 Letter-5 Broadband

Marketing Technology Letter

May 2002 – NO.5

Broadband to the last “m” Broadband capacity is increasingly extending from the network infrastructures into homes, shops and small offices. But do we really need it? What is the compelling killer app that will make broadband something really useful, a must.

In this paper, “m” stands for mile or meter like in the countries that have not quite completed their transition to the metric system (it depends on the context: when you see “exit 1/3m” on a motorway, it’s obviously not 0.333 meter away).

“m” for mile

The first broadband challenge is to cover the last mile to reach most of our homes, shops and offices. The incumbent telecom operators start to realise that the best way to fight challengers and create value is to re-invent themselves. They offer last mile technologies such as DSL (Digital Subscriber Line) in an increasing number of geographical areas and price the service at a more reasonable level. Cable operators tend to undercut these prices by overlaying broadband Internet on top of their increasing choice of TV channels. And people in isolated locations will be able to get the same thing via digital satellites.

“m” for meter

The next difficulty is to reach the last meter by extending the megabit channel into any place within a building. Offices can connect the fat pipe to their LAN (Local Area Network). But, in homes, one should be able to feed several PCs, TV sets and other digital gizmos without having to wire all the rooms; and what about people on the move with a laptop or watching TV in the garden? Wireless networking is the obvious answer and WiFi is emerging as the winning standard in this area.

Broadband could be a customer nightmare

But the real problems could surface when the number of broadband connections exceeds the number of narrowband modems. Broadband could then become a mischievous marketer’s dream (and a customer nightmare). It could spur the widespread creation of multimedia websites trying to entice surfers with home pages looking like Tokyo by night and featuring animation, video clips, pop-up windows, stereo sound and other aggressions. It could facilitate the transmission of more e-mail, with ‘richer’ content, more bells and whistles, to more people. It could enable better, insidious tracking of the surfer’s behaviour and the crafting of one-to-one messages that hit him or her at unexpected times.

“Got thirteen channels of shit on the TV to choose from. I've got electric light. And I've got second sight. And amazing powers of observation. And that is how I know When I try to get through On the telephone to you There'll be nobody home” Pink Floyd, The Wall, Nobody Home

The world is crisscrossed by an increasing number of high-capacity, broadband telecom channels that can carry gazillions of bits over thousands of miles in a split second. Yet, for a majority of mere humans, these fat pipes stop about a mile from where the bits are needed, by the switches of telephone companies or in the main electronic cabinets of cable service providers.

However, with broadband to the last “m”, we could face again the “technology in search of a problem” conundrum. Right now, what broadband seems to miss the most is a killer app[lication]. The few examples where broadband in the last mile is a real plus for ‘normal’ people include today: − − − −

make downloads significantly quicker (software updates, PDF documents, music files, videos, etc.) view rich media content (could be encyclopaedia excerpts but also TV-like ads) get entertained at a faster pace (e.g. run multi-player games online) be able to check e-mail, financial statements and other exciting things at the flick of the mouse since the line is permanently ‘on’

That’s not bad, indeed, but the above show only quantitative changes (except the permanent ‘on’ status). The killer app should exploit the disruption created by broadband throughput and offer qualitative changes. In the late 1800s, electrification had a limited impact until alternating current permitted electricity generation close to river dams and coal mines and its transmission through high-voltage lines. The key factor was distance. Today, the key factor is time. The killer app should revolve around the fact that one is permanently online (zero time to connect) and that the Internet performs something that is inconceivable at traditional modem speed (time to transfer data divided by 10 to 50). Visicalc, the original spreadsheet software, is often quoted as the killer app that made the PC market take off in the early 1980s. The Internet gave it a second boost from the mid 1990s. Can broadband be the rocket’s third stage?

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