If I had to pick a single thing that I believed would bring about the greatest changes in networking for 2024, I’d pick the transformation of broadband access infrastructure. It’s not so much that what’s going to happen will transform the average residential broadband experience, but that it will evolve the experience beyond its traditional boundaries. That’s going to bring about very big changes.
Right now, broadband Internet is delivered through cellular mobile networks and “wireline” networks, which collectively make up about a third of total network infrastructure costs for operators. Something like 75% of the US and other major markets are served by infrastructure that can deliver a 100Mbps experience, and in the US it’s possible to get that level of “business broadband” from residential-targeted infrastructure for almost 85% of business sites. However, broadband reliability is still cited as a problem by almost half of all residential users and 72% of businesses say that they have “undesirable” or “unacceptable” levels of problems with the business versions of the services.
There are three trends that are influencing how “home broadband” is delivered. The first is the introduction of fixed wireless access (FWA), and 5G millimeter wave in particular. The second is increased competition for, and subsidization of, underserved areas. Number three is the “open access fiber” strategy. All of these have independent impacts, but they also have a collective one we’ll close with.
FWA is a truly transformational strategy, a form of fiber-to-the-node (FTTN) where the node is a wireless station that can deliver up to a gig of bandwidth over distances ranging up to two miles. Verizon liked FWA from the start, as did T-Mobile, and even AT&T who initially dissed the whole idea is now eagerly embracing it because it offers a way to introduce broadband services to smaller rural municipalities and even residential subdivisions without having to wire every street and connect to every home or business.
Right now, FWA by either Verizon or AT&T is focused largely within the respective home regions, but T-Mobile has introduced the service with no real home region at all, since they don’t offer traditional wireline. I’ve heard planners from both AT&T and Verizon saying that they expect to be easing out of their home areas as early as late next year, and both would likely be more aggressive if they saw the other taking action or if T-Mobile seemed to be gaining too many customers.
The cable companies are looking at FWA too, with two different perspectives at once. On one hand, FWA is a major threat to the strategies some cable companies use to lock in residential communities. They cut a deal with local government or with the developers to wire up a community for free in return for exclusivity. In my home state, that’s a pretty common deal for “gated” communities and others who have an association to which residents pay dues. The problem is that a community can’t keep out a wireless signal, no matter what deals the cable companies had them sign. On the other hand, CATV cable is expensive to install if it’s not already there, and so FWA could allow cable companies to move into new areas at a lower cost, and even to expand their footprint.
That raises the second of our trends, which is competition/subsidization for underserved areas. If there’s government money to be had, then why not compete for it? In some cases, it’s economically reasonable to actually lay fiber to support new service areas, particularly if there is at least a pocket of higher opportunity/demand density to be exploited. In most cases, FWA is likely to be a better strategy, or even just the use of 5G cellular spectrum to serve a fixed location. Even state and local governments are interested in FWA as a means of getting their own communities better broadband.
All this interest in FWA is creating angst among fiber proponents (and suppliers). One possible way of countering FWA is to have an open-access fiber model of deployment. That means that some entity would deploy FTTH in a given area, and then sell access to the customers to multiple residential broadband suppliers who would actually provide the Internet connection and customer marketing. That model has been around for a couple decades, and though it’s not yet much of a factor in the US, it’s getting bigger in Europe, and some of the players there are now looking at the US.
The competition for technology approaches to residential broadband is almost certainly going to increase the broadband performance and reliability to the portion of the market that currently has sub-par broadband connectivity. That is likely to magnify the reliance of consumers on the Internet, on online shopping and buying, on smart home services, and on streaming content services. As that reliance expands, users will be less and less tolerant of broadband issues, and with more choices in provider available are likely to be creating churn where some provider is falling behind in QoE. As a result, residential broadband’s reliability and quality will improve sharply everywhere.
Business use of the Internet as a conduit to customers is already significant, and still growing. The improvements in underserved areas will expand that commitment, and so will the greater reliance of consumers on the Internet. All of this is almost certain to push businesses to expand their use of the cloud as a kind of universal application on-ramp, and that is likely to encourage more companies to support remote sites and mobile workers using the same Internet/cloud conduit back to their mission-critical apps. Obviously that reduces VPN usage. Then there’s the fact that as residential broadband improves in quality, and since it’s already far cheaper than carrier Ethernet and VPN access for remote offices, we can expect to see SD-WAN replacing MPLS VPNs in more and more situations. Some operators are already looking at what’s essentially an MPLS VPN over the Internet service, which is just a super-SD-WAN.
Where this will all lead, I think, is to a different model of access network that unifies business and residential services. Not only will it incorporate branch sites of enterprises, it may also absorb many of the current carrier Ethernet connections to the main data center sites. Any site with under 2Gbps connection capacity is a near-term candidate. As a result, I think we’ll see SD-WAN become the dominant enterprise architecture and the Internet become the almost-totally-pervasive data dialtone. It will take a couple years to make this happen, even to make a serious start, but it’s coming.
