Broadband: How Fast is Fast Enough?

This article original appeared in the Sept. 2012 issue of Next Gen Mobility.

There is controversy surrounding who, if anyone, said 640k of memory is all anyone would ever need. Many in the press attributed the comment to Bill Gates, but he denies he ever made such a statement. But it’s the concept which is more important to me than who uttered it first or at all.

You see, we humans are constantly amazed at our own genius. I remember marveling at the one MB of RAM on the Zilog computer that used to house TMC’s (News - Alert) databases in the 1980s. The same computer used 50 MB hard disks, which were about half the size of a loaf of bread.

And every computer from that point forward seemed like it would be state of the art forever. I was equally blown away that a modem could run at 1,200 baud, as working at 300 baud was torture.

For those of us in tech, the answer to the question, “What is fast enough?” will always be nothing, at least if history is any guide – and it always is.

Consumers will never be satisfied. They will always want more.

They will buy more devices with greater resolutions and request more and more bandwidth.

At some point soon, live streaming will be done by millions as they share their first-person view with the world at large. I imagine going to a Facebook (News - Alert) page a few years from now and seeing live streams from my friends. I will see them in class and at the zoo. Note to self: Patent software that turns off live streams in the bedroom and/or bathroom.

There are myriad reasons why speed counts, and perhaps the most important is speed = revenue. A 400 ms delay on the web translates into a .44 percentage drop in search volume, for example. To put this in perspective – most of Google’s (News - Alert) revenue comes from ads displayed on search pages, and last quarter alone the company company generated $12.21 billion! It just so happens that .44 percent of this amount is over $50 million.

But these results aren’t just applicable to the world’s largest search engine. Gary Kim (News - Alert) points out the following related examples:

When Edmunds redesigned its insideline.com site to reduce load times from nine seconds to 1.4 seconds, ad revenue increased 3 percent, and page views-per-session went up 17 percent.

When Shopzilla dropped latency from seven seconds to two, revenue went up 7-12 percent and page views jumped 25 percent. Shopzilla also reduced its hardware costs by 50 percent.

The great news is speed can and will be monetized as consumers want it and companies providing service generate more revenue when consumers spend less time waiting.

The real-world corollary to this situation occurs when you are at a check-out line and the person in front of you decides to use cash. Cash? For heaven sakes, why not just barter with goats and sheep? You get the idea. You are hurrying along with your fast-paced life and you know you just lost at least five minutes because the person in front of you doesn’t have plastic. C’mon, even the E*TRADE baby has a Black AMEX I hear. Is it that difficult to get with the times?

But I digress.

Fast broadband is good, and it is being offered everywhere. Consider, Verizon is charging $205 per month for 300mbps. Comcast (News - Alert) will match that speed for the same amount of money and raise it 5mbps for a total of 305mbps.

To add just a bit of pressure, Google now has its new free 5mbps service available in Kansas City with an available upgrade to a whopping 1gbps for just $70 per month. The question is: How can the company pull this off if it costs between $2,500 to $8,000 to deploy fiber to each home?

The point here is there is pressure from every direction to speed up the Internet and at the end of the day, everyone not only wants faster connections but will pay more for them.

While this is a straightforward argument, the unknown in this equation is what Google will be doing in the future with regards to broadband expansion. The company has not shied away from becoming a green energy company, a hardware company courtesy of Motorola Mobility, a maker of self-driving cars and more. Will they want to be a nationwide or even global provider of broadband and, if so, will their low pricing destroy the margins enjoyed by other players in the market?

Moreover, what about mobile? How will we satiate the consumer demand for mobile broadband when people are used to speeds in the hundreds of mbps at home?

These last questions need some time to be worked out, but for carriers and companies providing broadband access the one lesson we should keep in mind is you can never provide enough speed. The question we still need to ponder is how deep into their pockets Google is willing to reach to disrupt the broadband market.