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Residential Broadband

Residential Broadband. Group A John Chuang Tushar Dani Ilin Tsai Ilya Bagrak Alexandra Fedyukova. Residential Broadband. Introduction Market and competition Technology Economics Policy and regulation Conclusion. What is Residential Broadband.

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Residential Broadband

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  1. Residential Broadband Group A John Chuang Tushar Dani Ilin Tsai Ilya Bagrak Alexandra Fedyukova

  2. Residential Broadband • Introduction • Market and competition • Technology • Economics • Policy and regulation • Conclusion

  3. What is Residential Broadband • Technologies that provide a high-bandwidth connection to the Internet for residential consumers • Replacement for the now fading residential dial-up technology • Entirely new online experience • Watching a video stream, • Downloading music in seconds, • Video and voice chats • Real-time gaming • This presentation is limited to US residential Broadband market

  4. Growth and Penetration • Fast growth, 11% increase per year • Reached more than 50% penetration already across internet households • Several competing broadband service providers • Telephone companies, wireless carriers, cable TV service providers and satellite providers

  5. DSL SBC Verizon Bellsouth Quest Cable Comcast Time Warner Brothers Cox Charter Cablevision Players • New technologies: • Wi-Fi (Google cloud in San Francisco, hot spots) • Satellite Signals • Wi-Max • BPL (broadband over power lines)

  6. Market segments & Prices: 1 • Competition for Broadband subscribers is bifurcating • Low end emphasizing price • High end emphasizing speed • DSL companies primarily target low price segment • Started penetrating into high end market, Verizon’s FiOS (15 mbps) • Cable companies have elected to stay exclusively at the high end • Bundling as a way to reduce churn rate & attract new customers • Triple and even quadruple play

  7. Market segments & Prices: 2

  8. DSL Technology • Limited distance to central office (CO) • Dedicated line from CO to home • Asymmetric flow • Typical speeds up to 1.5Mbits/s downstream

  9. Cable Technology • Shared lines to the nearest splitter • Generally higher speeds • Reaches more households since distance limitation is removed • Typical offering 4Mbits/s • Last Mile advantage

  10. Future Technology • WiMax • Metropolitan Area Networks (MANs) • 3-5 miles range, no direct line of sight required • 2Mbits/s practical limit • Can use existing cell towers • Broadband over Power Lines (BPL) • More pervasive infrastructure, but requires extra equipment • Up to 2.7Mbits/s • Superimposing analog signal over AC • Small deployments in operation (e.g. Manassas, Virginia 10MBits/s for $30.00 a month)

  11. Porter's Five Forces Model • Broadband over power lines • Wi-Fi free internet (Google) • Municipal utility internet • Wi-Max New entrants • Cable and DSL Co. • “cut-throat” competition • Trend to provide a bundle of services • Cable companies converging from video to telephony • - Cox, Comcast • Telecom companies converging from telephony to video • - SBC, Bellsouth, AOL • Large number of • equipment suppliers are available • e.g. Nortel, Lucent, Cisco, Nokia etc. • Limited companies actually own network lines, and heavily depend on network owners • Broadband as a Commodity. • Some people have 3 to 4 providers to buy from • Tend to buy bundled services • Switching costs are low, unless annual contracts Suppliers Buyers Substitutes • TV, Music • Newspapers • Telephone etc Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)

  12. Policy and RegulationExisting situation • US is 16th in the world in broadband penetration (ITU 2005 report) • Why is US so far behind? • “monopolistic structure, entrenched management, and political power of incumbents” • failure of effective policy and regulation for broadband industry (e.g. ,FCC regulation on spectrum allocation policy) • Legislative tug-of-war • Preserving Innovation in Telecom Act of 2005 • Community Broadband Act of 2005

  13. Policy and Regulation • Need for national broadband strategy • Continue to encourage highly successful open access model in Japan • competitors may use existing residential telephone infrastructure for a modest fee • competition and innovation  cheap, high-speed broadband access • Regulations for emerging technologies • FCC: better allocation of wireless spectrum • Municipal WiFi usage • Mixture of legislative, regulatory, and investment initiatives

  14. Conclusion • Market & Players • Broadband will replace dial-up • The Battle is still pretty much between Cable and DSL companies • Technology • New technologies such as BPL, Wi-Max, Satellite are emerging, but are not great threat to existing Cable & DSL • Economics • Bundling as a way to keep existing and attract new customers • Segments based on Price and Speed • Regulation • Need for national broadband strategy, open access, economic incentives

  15. Conclusion • Cable companies have advantage due to their infrastructure and “quadruple play” • They will be top player in coming years • No winner take all conditions, Cable companies, DSL companies, and new technologies will co-exists

  16. Thank you Clap & Questions

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