Point Topic Claim Residential Demand for 1Gbps Fibre Broadband is Low

A new study from telecoms analyst Point Topic UK has suggested that there is a ceiling to the broadband speeds that residential consumers are prepared to pay for, with hybrid-fibre (e.g. FTTC, FTTN) solutions tending to dominate the “superfast” market and demand for “bandwidths of a gigabit” being “relatively low“.

The research claims that consumers have started to see the point of superfast speeds from their ISP, albeit only up to internet download speeds of around 60-70Mbps (Megabits per second). This performance, claims the analyst, is enough to “stream a high definition video or three with perhaps some light browsing on the side” (i.e. ideal for a modern family). But apparently people rarely see much need for anything more.

Similarly the analyst notes that, in terms of modern internet applications (e.g. video streaming), there is currently “nothing that threatens to add up to much more than 40 to 50Mbps particularly over any significant time period“. It adds that there are still relatively few households that will use even 20Mbps “for more than a few seconds or at most minutes at a time“.

But Point Topic does admit that there are already some ISPs making a success of even faster speeds (e.g. B4RN, Hyperoptic) and in “ten years time” the situation could be very different.

Oliver Johnson, CEO of Point Topic, said:

“Consumers are making a decision when they sign up to an operators service that will usually be with them for at least a year and often two. If you are offered more bandwidth then fine but if it comes at a higher cost then a more complex value judgement takes place.

Suppliers can satisfy most of their customers and still keep their capital expenditure under control. Fiber to the node is a more realistic option at the moment since it provides enough of an bandwidth upgrade to satisfy demand as well as being a stepping stone for future deployments. It’s a half way house that both suppliers and customers can accept and afford.”

The study does however recognise that “the most persuasive argument” for rolling out a true fibre optic (FTTH, FTTP etc.) service now is “future proofing” and it warns that operators adopting a hybrid approach may have to “come back for another deployment round in five to seven years“. At that time some of the smaller FTTH ISPs could also be “swept up by the market leaders” (taken over).

As a side note it’s also worth remembering that hybrid-fibre solutions, such as BT’s FTTC service, don’t deliver superfast broadband (25-30Mbps+) speeds to everybody and many lines could receive well below that level of performance.