PRI Fellow: The Future of Broadband Looks Bright

Tech Policy Central, November 24, 2008

This post has been weeks in the making, in the sense that it’s about an event that I attended in San Jose on November 6th: the broadband policy meeting co-hosted by the Federal Communications Commission (FCC) and National Association of Regulatory Utility Commissioners (NARUC).

I’ve already written about a couple of the sessions that took place at the FCC-NARUC meeting, but there’s one more talk I’ve been meaning to touch upon.

Daniel Ballon, a policy fellow in technology studies at San Francisco-based think tank Pacific Research Institute (PRI), gave a presentation on “The Future of Broadband” that looked at the market for broadband and some of the models of projected growth.

According to Ballon, innovation at the content level (think online video like YouTube) creates demand for broadband technologies (people want/need faster connections to enjoy video). That demand then spurs further investment in broadband, which (ideally) leads to more broadband adoption. And the cycle repeats itself as the increased user base prompts developers to innovate.

In such a model, he argues, enormous content innovation is making broadband investment the limiting factor. Which is why he believes that the net neutrality debate is actually “good news for broadband.” Ballon believes that the back and forth on network management and bandwidth capacity is a sign that we’re on the “cusp of an explosion in new broadband technologies, deployment and adoption.”

So what will drive the next explosion in content?

Ballon cited data from Cisco Systems that projects that, in 2012, total IP traffic will be six times larger than it was last year and the Internet will be 75 times larger than it was in 2002. That means that Internet traffic in 2012 would generate the equivalent of nearly 7 billion DVDs worth of data per month.

He listed eight innovations that are likely to drive future broadband growth:

  • High-definition video-on-demand services like Hulu and Netflix (Parks Associates forecasts that the customer base will expand seven-fold in five years, to about 30% of households)
  • Internet TV services like Joost, Fancast and Veoh (iSuppli predicts the market will reach $5.8 billion by 2011)
  • High-definition video conferencing like telepresence
  • Telemedicine
  • Virtual worlds
  • Internet-connected gaming consoles like Xbox Live (Parks Associates forecasts it to be a $8 billion+ market by 2013)
  • Cloud computing (According to IDC, spending on cloud services will reach $42 billion by 2012)

His conclusion was that the future of broadband looks bright, with abundant innovation in both content and broadband technologies like DOCSIS 3.0, FTTx and 4G networks like WiMAX and LTE. And, in keeping with PRI’s free-market approach, he urged a regulatory approach that’s technology neutral and doesn’t try to “pick winners” among broadband competitors.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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