Broadband and the Future of Networked Computing
by Theresa Lütge-Smith
As recently as December 2001, the prognosis for broadband as the cure-all for Internet ills was decidedly gloomy.
The much-needed boost for online business and advertising did not seem to be materializing; some reports and statistics put the usage of US Broadband clients at a mere ten percent (Source: Wired News) of total Internet usage. Yet, nine months later, this attitude amongst experts has changed somewhat, claiming that broadband has unequivocally hit the mainstream.
The Nielsen/NetRatings recently reported that broadband usage reached the critical 50 percent benchmark at the start of this year. People with high-speed connections accounted for 51 percent of the 2.3 billion hours that Americans spent online during January. In comparison, broadband users only accounted 38 percent of the total online time during the same period last year. The important aspect that these statistics highlight is the balance between narrowband and broadband, which has been tipped in favor of broadband usage. This boils down to the fact that people who use the Internet from high-speed connections spent more time online than people with traditional phone lines. This is important news for the broadband industry and for the future of the high-speed Internet.
Mainstreaming Broadband
A question foremost in the minds of market researchers and media experts is Why this surge in broadband usage? Recent surveys offer some reasoned answers. McKinsey and Jupiter Media Metrix reveals a new trend in the usage of broadband: the previously targeted consumer sector has moved away from being dominated by mainly young male users and is now reaching a much wider consumer segment. This includes a broader cross section of online viewers, with greater variety in age categories, family composition and residual income. Korea, which is a budding broadband market, is showing a new trend towards an increase in female users of broadband. The rising popularity of broadband also has implications for networking, as many homes are establishing in-house networks, which in turn, fuels the broadband revolution. Moreover, there is the distinct possibility that home networking has been one of the elements that has increased the demand for greater broadband usage.
It is significant that eMarketer foresees 117-million broadband households worldwide in 2004. The same source also predicts that the Asia-Pacific region will contain more broadband subscriptions than North America and Latin America combined, at nearly 50-million by 2004. DSL usage has surpassed 17-million, with the service's popularity mostly attributed to the sharp rise in the number of DSL subscribers in the Asia-Pacific region. In the US the situation is slightly different with cable modems outnumbering DSL subscriptions. At the start of this year 7-million households in the United States were using cable modems as opposed to 4.6-million using DSL. Another five percent of broadband users make use of satellite broadband, fiber-to-the-home, and fixed wireless service.
A National Priority
The importance of the move toward broadband connections is further evidenced by the recent move to make broadband a national priority in the United States. A recent article in Computer World states that "High-Tech CEO's are urging the Bush Administration and Congressional Leadership to make broadband deployment a national priority, worthy of the same attention President Eisenhower gave the Interstate Highway System" (01-28-2002; Publication: Computer World). The reason given for this new priority is that "this technology will give every industry the opportunity to fundamentally change the way it operates, with substantial productivity and efficiency improvements." Big business and corporations are also beginning to be more convinced of the effectiveness and viability of broadband. Music and movie recording companies are encouraging more people to buy online, despite the seemingly interminable fight with file-sharing software companies, initiated by Napster. Another reason given is that a national emphasis on broadband would help the telecom industry and rejuvenate the present economic decline.
Networking and Broadband
As an important aspect of data transmission over the Internet, broadband is influenced by, and has a reciprocal influence, on other market factors. The boost in broadband usage may also be attributed to the increase in networking, particularly in the demand for home networking.
David Strom, technology editor for the US VAR Business Magazine, and author of Home Networking Survival Guide, (2001, Osborne/McGraw Hill) states, "Right now, home networking is driving broadband. As homes get their second (or third...) computer, people want to connect all of them to the Internet and access the 'Net at higher speeds than dial up modems." Another expert in the field, well known author and Internet Marketing Consultant (www.samizdat.com) Richard Seltzer, also reiterated this connection between networking and broadband. "High-speed, always-on access - as opposed to dial-up access - for individuals at home is growing at a ridiculously rapid pace in the United States (cable and DSL). As a result, new business opportunities are opening up that involve heavy use of video/audio."
In effect this means that with the increase in networking fueling the developments in broadband, the situation has become much more viable for businesses to advertise using media and technology that previously was too fast for narrowband connections. This obviously includes video and audio as a viable means of communicating marketing messages. The prediction is therefore that new business models will be created and built around the broadband user. This will obviously have a profound effect on e-commerce and streaming media.
Previously, home-networking was something of a sideline market, but this has changed in recent years with broadband suppliers, chip manufactures and software developers pushing home-networking into the forefront and into mainstream focus. It's no wonder that industry analysts see a connection between multiple PC ownership and broadband access. They are of the opinion that broadband subscribers will want to make their high-speed connection freely available to every resident in the house. A quotation from an article in America's Network attests to this trend: "Our studies already indicate a 20% penetration for home networks among individuals with broadband connections," says Michael Harris, President of Kinetic Strategies, a small Phoenix-based research firm reporting on the cable television industry. "Of course that may only be a couple of computers sharing access, but it's a beginning, and over time, we see that percentage doubling."
One of the central reasons for the increase in home networks is the easier installation and maintenance that software companies have made possible. While the earlier home network involved high labor costs and a steep technical learning curve, today there are easier connection options such as Home PNA, HomePlug and 802.11 wireless LAN connections that greatly simplify the process. Broadband connections have many advantages and uses for the home user. One of these is the use of multiplayer gaming, which is hugely popular with younger Internet consumers. Broadband connections also allow for an easy gaming process, which does not tie up connections.
The Global Factor
Networking has its value in producing an environment that encourages growth in interaction and new economic values, making the Internet world smaller. Its major advantage is in stimulating the creation of a global community, which transcends boundaries. This requires broadband technology to allow media-rich content to be shared and explored across boundaries. Just as important is the development of management tools such as CRM and ERP. At the moment there seems to be a drive within the online industry to create tools and the environment to make broadband networking a common and ubiquitous reality.
This trend can be seem in emerging markets such as Korea, which is at present the most developed country in the world in terms of broadband technology. Korea has over 8.5-million broadband subscribers. ADSL subscribers account for 57 percent of this number.
Another indication of the intensified move towards increasing broadband access and its ensuing marketing potential is the growing trend in the UK where it has passed the 500,000 mark. A number of initiatives to encourage broadband subscription have been implemented. Among these are the West Midlands cable TV and Internet firm Telewest, who recently introduced a cut-price introduction to broadband. The company is now offering customers a no-obligation broadband Internet connection for less than the price of the average and much slower dial-up service.
One of the reasons given for this initiative is that broadband is additive and customers will not easily fall back to a narrowband connection. Another report from a UK newspaper has the same theme: BT's mass market Internet Service Provider, BTopenworld, has announced major cuts to broadband prices, plus plans to launch a self-install product with a special offer of free line activation. From April 1 the price of broadband will drop from £39.99 a month to £29.99 a month for existing Home 500 and Business 500 customers. BTopenworld is also cutting the rental charges for its Ethernet products by £20 a month for business 500 plus, and £10 a month for the 1000 plus and 2000 plus products.
New Technologies
There are a number of new technologies that are being spawned to meet the broadband demand. One of these is WiFi, which stands for "wireless fidelity." WiFi uses a device, known as an "access point" that consists of a transmitting antenna attached to an electronics component. Once connected to the Internet via communications cable. The WiFi box is able to broadcast Internet data to computers that are fitted with a compact WiFi receiver, within several hundred feet. More importantly WiFi broadcasts at a high bandwidth and communicates enough data simultaneously to keep up to 100 computers downloading and surfing on the Internet. One of the important aspects of this technology is that it may reduce the cost of deploying broadband and thereby stimulate competition and innovation. This is due to the fact that the most expensive part of establishing a broadband connection to a consumer's home lies in that last mile of the transmission. The laying of cable can be an expensive issue; WiFi bypasses this by using chains of WiFi bridges that are capable of relaying broadband services across long distances. This allows the communications conduit to bypass cable and TV companies. Wireless technology is one of the more promising modes of providing cheaper broadband access. However, at present the experts still claim that it lacks the necessary speed; but they quickly add that this will improve dramatically over the next few years.
New technologies and ideas for the promotion of broadband are popping up everywhere. In countries where the cost of bandwidth is expensive there are new and innovative ideas to deliver rich content. One of these presently being touted is Content Delivery Networks. These are systems that move the content closer to the user. They do this by routing the requests for content to the best or closest source, thereby eliminating bandwidth congestions and providing a way of distributing content in a quick and efficient way. Users are served by Content Engines and content is cached for speedier delivery. While this may not exactly be broadband, it serves to facilitate the communication of rich-media and once again emphasizes the market desire for this commodity.
While many other technological innovations and developments are taking place, all point to the same inescapable conclusion that narrowband is fast becoming a thing of the past. Broadband is destined to become the mode of Internet access that will be the common way of communicating with a networked world.
Views
Experts state their views about current and future prospects of broadband connections.
Richard Seltzer, Internet marketer and author, states that the imagination is the only barrier to the possibilities of broadband Internet. The delivery of immediate video and rich media provides a range of exciting possibilities, which have already been explored and successfully implemented by the online adult industry.
"Today, in the US, adult entertainment sites such as Hustler, are delivering full-screen streaming video. In other words, you can watch full-length movies on your PC (with a broadband connection) with the same quality as watching videotape or a movie over cable TV. Obvious business models are already in place; pay a monthly subscription fee and you can watch whatever you want, whenever you want, and as many times as you want. Or you can pay-per-view with thousands of selections; you determine the start time, and you have access to that movie for 24 hours (as opposed to cable TV where you have just a couple dozen choices and the provider sets the start times)."
Building addictive sites has long been the ultimate goal of Webmasters and site developers, and by using the possibilities that broadband offers, this goal can now become a reality.
* For instance, consider sports sites. espn.com has enhanced its offerings of sports-related information with "game casts" - java applications that provide live continuous updates of ongoing sports contests like baseball games. mlb.com (major league baseball) now offers, for a "season fee" (as opposed to a monthly fee), access to live and recorded radio broadcasts of every single major league baseball game."
Richard Seltzer's articles and views can be accessed at:
www.samizdat.com; his marketing site is at www.samizdat.com/consult.htm. He also has an online store at store.yahoo.com/samizdat. Richard is the author of Web Business Bootcamp (Wiley), Take Charge of Your Web Site (MightyWords), Shop Online the Lazy Way (Macmillan) and The AltaVista Search Revolution (Osborne/McGraw-Hill).
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