Can we all be bitheads by 2040?

Mixed signals and uncertain futures blur broadband growth.

“Broadband has continued to grow robustly through the last 18 months relative to other sectors, predicting what will happen next is becoming increasingly challenging,” says Oliver Johnson, CEO at Point Topic.

On the one hand the many markets are reporting accelerating broadband growth while the world collectively has grown at the slowest rate ever recorded in a three month period. In one ear we hear about encouraging fundamentals from many economies, concerning inflation, interest rates, the balance of payments and signs that unemployment growth is levelling off. In the other ear there are predictions of deflation, concern over out of control public sector borrowing, post-stimulus crashes and nasty surprises in the economic pipeline.

A major issue with projecting broadband growth, or (whisper it) decline, are the number of external factors affecting take-up. Availability, cost, perception, competitive and anti-competitive regulation, stimulus packages, market saturation, quantitative easing as well as plain old cash in the bank alter growth patterns around the world and interact with each other without reference to linear constraints.

Figure 1: GDP and broadband quarterly growth – an externality but not the decisive factor

GDP in the OECD group of countries along with broadband growth for the world, OECD and BRIC (Brazil, Russia, India, China) markets.
“From the work Point Topic has done in the UK we can see a direct relationship between GDP and broadband growth but this is blurred by several effects projected worldwide. Over the last few years there has been downward pressure on growth as markets become saturated, economies contract and confidence is eroded. To be even handed there are markets where growth only ever dipped slightly, consumer perception of broadband is shifting and governments are increasingly keen that their population are on-net,” says Johnson.

While this makes it difficult to predict what will happen in the next 12 to 18 months the broader implication is that broadband growth is determined more by the desire of peoples and governments rather than short term economic fluctuations. Taking all this into account, Point Topic will be updating our six-monthly forecasts shortly.

Can we all be bitheads by 2040?

In order to reach another 1.5 billion homes, those not yet connected to the net, growth needs to be average around 5% per year over the next 30 years.

Many countries are proposing broadband should be available to their entire population, and some are already there. Virtually all Governments in the ‘broadband first world’ have committed varying degrees of cash and regulatory aid to try and ensure they don’t get left behind. Net neutrality would also have a positive effect on growth in the medium to long term.

It’s not just about letting the world know what you had for lunch, broadband and the internet make a step change in our lives and providing it to as much of the population as possible brings major benefits.

Broadband deployment leads to a measurable increase in GDP, in the UK the first wave of broadband deployment added up to £20billion a year to the economy*, improved educational standards and exam results, provided cost savings for consumers, companies and governments and results in better informed and more engaged citizens.

Point Topic expects broadband growth to be around 10% over the next 12 to 18 months taking the world past half a billion broadband lines. As availability continues to improve, witness recent news from East Africa, new markets will offset at least some of the slowdown brought by saturation.

“Getting the world online, even though the poorest will be last, will be a goal worth scoring. Ultimately it will be economically and perhaps more importantly socially advantageous even if it takes a generation to achieve,” concludes Johnson.

*Digital Britain report, June 2009 – http://www.culture.gov.uk/images/publications/digitalbritain-finalreport-jun09.pdf

***END***

For background data and charts please contact:

Point Topic: Oliver Johnson

Email: oliver {at} point-topic(.)com

Tel. +44 (0) 20 3301 3303

About Point Topic

http://www.point-topic.com

Point Topic is an analyst company focusing entirely on broadband. Point Topic’s international services have a global reputation for providing the most up-to-date and authoritative user statistics, supplier profiles and applications reports on DSL, FTTx, cable and other broadband services worldwide.

Point Topic, reg. in England 3503830. 61 Gray’s Inn Road, London WC1X 8TL.