Copyright 2015, Technology Futures, Inc. 1

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1 Copyright 2015, Technology Futures, Inc. 1

2 Broadband Access in America: Status, Forecasts, and Politics Lawrence Vanston, Ph.D. President, Technology Futures, Inc. International Institute of Forecasters 35th International Symposium on Forecasting June 21 24, 2015 Riverside, California - USA Research Blvd., Bldg. C-1 Austin, Texas Copyright 2015, Technology Futures, Inc. 2

3 TFI Broadband Forecasts, 1990s Copyright 2015, Technology Futures, Inc. 3

4 A Facsimile of the Future: Forecasts of Markets and Technologies, Lawrence K. Vanston, William J. Kennedy, and Samia El-Badry-Nance (1991) Computer-Based Imaging and Telecommunications: Forecasts of Markets and Technologies, Lawrence K. Vanston, Samia El-Badry-Nance, William J. Kennedy, and Nancy E. Lux (1992) Interactive Multimedia and Telecommunications: Forecasts of Markets and Technologies, Julia Marsh and Lawrence K. Vanston (1992) Local Area Network Interconnection and Telecommunications, Bruce R. Kravitz and Lawrence K. Vanston (1992) Video Communications, Lawrence K. Vanston, Julia Marsh, and Susan M. Hinton (1992) Telecommunications for Television/Advanced Television, Lawrence K. Vanston, Julia Marsh, and Susan M. Hinton (1992) New Telecommunications Services and the Public Telephone Network, Lawrence K. Vanston (1993) All Technology Futures, Inc. Copyright 2015, Technology Futures, Inc. 4

5 Percentage of Households U.S. Digital Households,1996 TFI Forecast Households Using Digital Services 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% MM Online/Internet Households 0% Year Households Using Digital Services (incl. ISDN,xDSL,Cable Modems) Copyright 2015, Technology Futures, Inc. 5

6 Percentage of Households U.S. Broadband Households, 1996 TFI Forecast Households Using Digital Services - Minimum Competitive Data Rates 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Maximum loop lengths shown in italics 1.5 Mb/s 18 kft Digital Services 1.5 Mb/s & Above 6Mb/s 10 kft 24 Mb/s 3 kft 100 Mb/s & Above 1 52 Mb/s 0% Year Copyright 2015, Technology Futures, Inc. 6

7 Average Data Rate (Mb/s) Average Data Rate, 1996 TFI Forecast Home Digital Services - Average Data Rate Mb/s 6 Mb/s 100 Mb/s 24Mb/s Mb/s Kb/s 28 Kb/s Annual Increase: 50% Year Copyright 2015, Technology Futures, Inc. 7

8 Constant Percentage Rate of Advance Most new technologies progress this way Rates will continue if: The improvement is technically possible Basic approach remains the same Demand, utility, need continue From TFI s Technology Forecasting Seminar Copyright 2015, Technology Futures, Inc. 8

9 Percentage of Households U.S. Minimum Broadband Availability & Broadband Households, 1996 TFI Forecast Home Digital Availability and Subscribers Mb/s & Above 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Take-Rate AVAILABILITY 1.5 Mb/s & Above SUBSCRIBERS 1.5 Mb/s & Above 0% Year Copyright 2015, Technology Futures, Inc. 9

10 Adoption and Availabilty Adoption, the percentage of the potential market that has adopted the service (e.g., subscribers), aka, Market Penetration Availability, the percentage of the potential market that has the service available (e.g., homes passed) which reflects the deployment of network technology Take Rate = Adoption / Availability = Subscribers / Homes Passed Copyright 2015, Technology Futures, Inc. 10

11 Original Source: Telecommunications for Television/Advanced Television: Forecasts of Markets and Technologies, Lawrence K. Vanston, Julia A. Marsh, and Susan M. Hinton, Technology Futures, Inc., Recent Paper: Forecasting Communications Services: Technology Deployment and Customer Adoption, Lawrence K. Vanston, 2nd Workshop on ICT and Innovation Forecasting, Paris, May 27-28, 2015 Copyright 2015, Technology Futures, Inc. 11

12 U.S. Broadband* Households,1999 TFI Forecast *Broadband = High-speed Digital Access Analogy Country Range b Radio U.S Color TV U.S Television U.S CD Player U.S VCR U.S Pay cable U.S Average.2155 Lawrence Vanston, Forecasts for Internet/Online Access, Presentation to 17th Annual ICFC Conference, Denver, Colorado, June 15-18, Copyright 2015, Technology Futures, Inc. 12

13 U.S. Minimum Broadband Availability & Broadband* Households, 1999 TFI Forecast Percentage of U.S. Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Minimum Availability Cable Modem Estimate Year High-speed Digital Access Households Lawrence Vanston, Forecasts for Internet/Online Access, Presentation to 17th Annual ICFC Conference, Denver, Colorado, June 15-18, *Broadband = High-speed Digital Access Copyright 2015, Technology Futures, Inc. 13

14 Percentage of Households U.S. Availability & Adoption of Broadband ( ) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Actual Availability (Homes Passed) b f =.56 Subscribers 0% Year b g =.24 Minimum Availability b g / b f =.33 b g / b f =.42 Source: Technology Futures, Inc. Broadband Access 2015 Data Source: Kagan and FCC Copyright 2015, Technology Futures, Inc. 14

15 Percentage of Households U.S. Broadband Households, 1999 TFI Forecast 100% 90% 80% 70% 60% Maximum loop lengths shown in italics Digital Services 1.5 Mb/s & Above 50% 40% 30% 20% 10% 1.5 Mb/s 18Kft 6Mb/s 10Kft 24 Mb/s 3Kft 100 Mb/s & Above 52 Mb/s 0% Year Lawrence Vanston, Forecasts for Internet/Online Nominal Range Access, Presentation to 17th Annual ICFC 1.5 Mb/s Less than 3 Mb/s Conference, Denver, Colorado, June 15-18, Mb/s At least 3 Mb/s and less than 10 Mb/s 24 Mb/s At least 10 Mb/s and less than 100 Mb/s 100 Mb/s At least 100 Mb/s Copyright 2015, Technology Futures, Inc. 15

16 TFI Broadband Forecasts, 2000s Copyright 2015, Technology Futures, Inc. 16

17 U.S. Broadband Households, 2004 TFI Forecast Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All Broadband Households 1.5 Mb/s 6 Mb/s Year 24 Mb/s 100 Mb/s & Above Source: Technology Futures, Inc. Lawrence Vanston and Ray Hodges, Technology Forecasting Nominal Range for Telecommunications, Telektronikk 1.5 Mb/s Less than 3 Mb/s (Telenor) , pp Mb/s At least 3 Mb/s and less than 10 Mb/s 24 Mb/s At least 10 Mb/s and less than 100 Mb/s VHS 100 Mb/s At least 100 Mb/s Broadband Copyright 2015, Technology Futures, Inc. 17

18 Trend in Residential Access Data Rates M o d em an d D S L S p eed s D ata R ate (K b P erform ance incr eases on average 4 tim es e very 4 years D S L S p e e d s (r=4 1 % ) A na log M o d e m S p e e d s (r=4 0 % ) Year IBC, London, 10 October 2001 London Marriott Hotel Copyright 2015, Technology Futures, Inc. 18

19 Broadband Access 2007 Trend in Residential Access Data Rates Nominal Data Rate (Mb/s) Broadband Analog Modems Performance Increases 4 times every 4 years (42% annually) Year Source: Technology Futures, Inc. Copyright 2015, Technology Futures, Inc. 19

20 Forecasted Life-cycle for Standard DSL circa 2004 Copyright 2015, Technology Futures, Inc. 20

21 Broadband Minimum Availability 24 Mb/s & Above 100% Pct of Households 90% 80% 70% 60% 50% 40% 30% Minimum Required Availability, 24 Mb/s & Above Broadband Subscribers, 24 Mb/s & Above 20% 10% 0% Year Source: Technology Futures, Inc. Lawrence Vanston and Ray Hodges, Technology Forecasting for Telecommunications, Telektronikk (Telenor) , pp Copyright 2015, Technology Futures, Inc. 21

22 U.S Broadband Households, 2008 TFI Forecast Broadband Access 2008 Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All Broadband Households 1.5 Mb/s Data Source: FCC. Speeds are based on DSL & FTTL data. Excludes m obile w ireless broadband Year 6 Mb/s 24 Mb/s 100 Mb/s & Above 50 Mb/s Source: Technology Futures, Inc. Nominal Range Lawrence Vanston and Ray Hodges, Transforming 1.5 Mb/s Less than 3 Mb/s the Local Exchange Network, 4 th Edition, 6 Mb/s At least 3 Mb/s and less than 10 Mb/s Technology Futures, Inc., Mb/s At least 10 Mb/s and less than 25 Mb/s 50 Mb/s At least 25 Mb/s and less than 100 Mb/s VHS 100 Mb/s At least 100 Mb/s Broadband Copyright 2015, Technology Futures, Inc. 22

23 Broadband Access Fiber 2008 VHS Fiber Adoption (Telco Operators) Percentage of Access Lines 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Verizon FiOS Leading ILECs AT&T U-Verse Industry Average Others estimated to lag industry avg by ~1.5 years Year Source: Technology Futures, Inc. Lawrence Vanston and Ray Hodges, Transforming the Local Exchange Network, 4 th Edition, Technology Futures, Inc., 2008 Copyright 2015, Technology Futures, Inc. 23

24 Broadband Access Fiber 2008 Industry VHS Fiber Deployment Compared to VHS Broadband Availability Requirement (Telco Operators) Percentage of Access Lines 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Industry VHS Fiber VHS Broadband (24 Mb/s & Above) Required Availability Year Lawrence Vanston and Ray Hodges, Transforming the Local Exchange Network, 4 th Edition, Technology Futures, Inc., 2008 Source: Technology Futures, Inc. Copyright 2015, Technology Futures, Inc. 24

25 TFI Broadband Forecasts, 2010s Copyright 2015, Technology Futures, Inc. 25

26 U.S Broadband Households, 2013 TFI Forecast Broadband Access 2013 Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6 Mb/s All Broadband Households 1.5 Mb/s 24 Mb/s Data Source: FCC. Data excludes mobile w ireless broadband Year 50 Mb/s 100 Mb/s & Above Source: Technology Futures, Inc. Nominal 1.5 Mb/s Range Less than 3 Mb/s Lawrence Vanston and Ray Hodges, Transforming the Local Exchange Network, 6 th Edition, 6 Mb/s At least 3 Mb/s and less than 10 Mb/s Technology Futures, Inc., Mb/s At least 10 Mb/s and less than 25 Mb/s 50 Mb/s At least 25 Mb/s and less than 100 Mb/s VHS 100 Mb/s At least 100 Mb/s Broadband Copyright 2015, Technology Futures, Inc. 26

27 Broadband Access Fiber 2013 VHS Broadband Deployment by Type (Telco Operators) Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Rural Areas FTTP ILECs FTTN ILECs Industry Large ILECs Middle Scenario Year Source: Technology Futures, Inc. Lawrence Vanston and Ray Hodges, Transforming the Local Exchange Network, 6 th Edition, Technology Futures, Inc., 2013 Copyright 2015, Technology Futures, Inc. 27

28 Broadband Access Fiber 2013 VHS Broadband Deployment, Middle Scenario (Telco Operators) Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Rural Areas Non- Rural Areas Homes Passed, VHS Broadband Wireless Broadband and other VHS BB Techs Large ILECs Middle Scenario Year Source: Technology Futures, Inc. Lawrence Vanston and Ray Hodges, Transforming the Local Exchange Network, 6 th Edition, Technology Futures, Inc., 2013 Copyright 2015, Technology Futures, Inc. 28

29 Broadband Access Fiber 2013 VHS Broadband Availability and Deployment (Telco Operators) Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2 year lag 5 year lag VHS BB Req Avail 50 Mb/s Req Avail 100 Mb/s Req Avail Homes Passed, VHS Broadband Large ILECs Middle Scenario Year Lawrence Vanston and Ray Hodges, Transforming the Local Exchange Network, 6 th Edition, Technology Futures, Inc., 2013 Source: Technology Futures, Inc. Copyright 2015, Technology Futures, Inc. 29

30 Percentage of Population U.S. Population Density 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ,000 10, ,000 Population per Sq Mile Pop Density Data Source: U.S. Census Bureau Source: Technology Futures, Inc. 1 Sq Mile = 2.6 Sq km Copyright 2015, Technology Futures, Inc. 30

31 Why forecasting deployment by individual network operators is difficult Geographic factors, including density Regulatory and other government factors Aerial vs Buried Cable Financial, competitive, and demographic factors Copyright 2015, Technology Futures, Inc. 31

32 U.S Broadband Households, 2015 TFI Forecast Percentage of Households 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 6 Mb/s All Broadband Households 1.5 Mb/s 24 Mb/s 50 Mb/s 100 Mb/s 300 Mb/s & Above 0% Broadband Access 2014 Data Source: FCC. Data excludes mobile wireless broadband Year Nominal Range* 1.5 Mb/s Less than 3 Mb/s 6 Mb/s At least 3 Mb/s and less than 10 Mb/s 24 Mb/s At least 10 Mb/s and less than 25 Mb/s 50 Mb/s At least 25 Mb/s and less than 100 Mb/s 100 Mb/s At least 100 Mb/s and less than 300 Mb/s 300 Mb/s At least 300 Mb/s (includes 1 Gb/s) Source: Technology Futures, Inc. *These are based on downstream, but upstream is becoming important also. Copyright 2015, Technology Futures, Inc. 32

33 Percentage of Households Broadband Substitution Curves, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 6 Mb/s & Above 1.5 Mb/s & Above 24 Mb/s 50 Mbs & Above ` 100 Mbs & Above 300 Mbs & Above 0% Broadband Access 2014 Data Source: FCC. Data excludes mobile wireless broadband Year Source: Technology Futures, Inc. Lifecycle (t) = Substitution (t) Next Substitution (t) Copyright 2015, Technology Futures, Inc. 33

34 Resulting Average Data Rate Average Data Rate (Mb/s) Growth Rate = 33% Trend Line Weighted Average Broadband Access 2014 Year Source: Technology Futures, Inc. Copyright 2015, Technology Futures, Inc. 34

35 Caveat: The generations reflect historic trends in nominal bandwidth demand. Market forces may accelerate these without a corresponding acceleration in actual bandwidth requirements. Example: 300 Mb/s & Above may include a lot of pre-mature Gigabit! Copyright 2015, Technology Futures, Inc. 35

36 Nominal Data Rate (Mb/s) Trend in Residential Access Data Rates 1,000, ,000 50,000 1,000, , ,000 10,000 Broadband 6,000 24,000 1, ,500 Analog Modems Performance Increases 4 times every 4 years (42% annually) Broadband Access 2014 Year Source: Technology Futures, Inc. Note: 1 Gb/s wasn t due until 2018 Copyright 2015, Technology Futures, Inc. 36

37 Conclusion We have been able to forecast the progress of broadband in the U.S. with reasonable accuracy over a period of 20+ years via Analysis of drivers and constraints Adaptions of basic exponential and S-shaped curves applied to minimal data This progress has occurred in the U.S. under market forces with minimal government involvement or regulation Copyright 2015, Technology Futures, Inc. 37

38 Forecast The same forecasting approach is likely to work in the future Continued progress is likely to continue in the future if we don t let politics mess it up (which we probably won t) Copyright 2015, Technology Futures, Inc. 38

39 Key Players The Service Providers (Cable TV and Telcos) The Application Providers (Google, Netflix, Facebook, etc.) The Federal Communications Commission (FCC) Consumers Copyright 2015, Technology Futures, Inc. 39

40 Comparative Broadband Statistics as a Political Weapon Copyright 2015, Technology Futures, Inc. 40

41 Highspeed and Standard Coverage by Technology Source: FCC, Fourth International Broadband Data Report (2015), Copyright 2015, Technology Futures, Inc. 41

42 Total Highspeed Broadband Coverage by Country, Dec 2012 Source: FCC, Fourth International Broadband Data Report (2015), Highspeed = 25 Mb/s (U.S.) = 30 Mb/s (Europe) Copyright 2015, Technology Futures, Inc. 42

43 Rural Highspeed Broadband Coverage by Country, Dec 2012 Source: FCC, Fourth International Broadband Data Report (2015), Copyright 2015, Technology Futures, Inc. 43

44 Highspeed Broadband Coverage, Europe 2012 Data Source: FCC, Fourth International Broadband Data Report (2015), cument/fourthinternationalbroadband-data-report Copyright 2015, Technology Futures, Inc. 44

45 Highspeed Broadband Coverage, U.S Data Source: FCC, Fourth International Broadband Data Report (2015), Copyright 2015, Technology Futures, Inc. 45

46 Average (Weighted) Actual Download Speeds, Based on Ookla data. Copyright 2015, Technology Futures, Inc. 46

47 Connection Speeds by Country, Akami, 4Q13 Akamai s State of the Internet: Q Report Copyright 2015, Technology Futures, Inc. 47

48 Connection Speeds by Country, Akami, 4Q14 Akamai s State of the Internet: Q Report Copyright 2015, Technology Futures, Inc. 48

49 Are these comparisons meaningful? Most countries ahead of U.S. are not comparable. Most are small, dense, and/or wealthy. Others have unique characteristics. Not clear that the differences imply significant competitive advantage Similar comparisons by city, by price, etc. are also questionable Yet loud rhetoric and major U.S. policy decisions are revolving around them Copyright 2015, Technology Futures, Inc. 49

50 Thank you! Larry Vanston Office Mobile Copyright 2015, Technology Futures, Inc. 50

51 (512) Your Bridge to the Future