Superfast Broadband - Who Needs It?

BT has announced that it will expand its roll-out of next-generation broadband to bring super-fast internet services to two-thirds of the UK. Under the new plans it will invest £2.5bn on its new fibre-network which will reach around two thirds of the UK population by 2015.

About a quarter of those on the network will be able to have download speeds of 100 megabits per second (Mbps) and uploads of 30 Mbps while the remainder will be able to get downloads of up to 40 Mbps.

Unless you are connected using Virgin Media’s cable, typical advertised broadband download speeds are currently 'up to' 8 Mbps, but often much less. So the new network will provide a great increase in speed.

But what is the business case behind this massive amount of investment? Or, to put it another way, what are the new services that need more bandwidth than current broadband can provide and will people pay more for them?

The growth in use of on-demand video is currently the major driver of demand for household broadband capacity. Most other applications require far less capacity. So the rate at which people start viewing good quality video over the internet, rather than via a TV aerial, satellite dish of cable network, is what will drive the overall traffic on the network.

However it won’t justify investing in super-fast broadband networks. Based on network speed research, over 80% of homes can already receive a standard definition video stream at 2Mbps (even allowing for 1Mbps of 'additional' broadband traffic to the home). And nearly 50% of the population should be able to receive high definition video using current infrastructure. So, for most forecast usage, the current network will be adequate.

Does BT really know what the new services and revenues are going to be or does it believe the new capability will stimulate as yet undreamt of applications?

My hunch is that there is a limit to the rate at which human brain can absorb information and that current networks, that can provide a good quality on demand video signal, will meet a large proportion of the requirement for a few years yet.

However, we humans are not the only users of services over the Internet. Increasingly wired homes with intelligent appliances will share increasing volumes of data.

Perhaps it is a case of 'build it and they will come', it is just that 'they' are not human.