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Where are the Gigabit Applications?

I remember that soon after the City of Chattanooga launched its citywide fiber network, the company held a competition seeking web applications that would benefit from gigabit speeds. I don’t recall if anything useful came out of that effort, but I know that there are still today almost no big bandwidth applications on the web online aimed at the average household.

There are always a few people in every community that immediately benefit from gigabit broadband. In many of the cities I’ve worked with, some of the first customers who signed up for residential gigabit service are radiologists and other doctors who appreciate the ability to review medical imagery without having to pop into the hospital in the middle of the night. I know of a few cases where doctors now buy multi-gigabit connections as fast as 10-gigabits because a gigabit isn’t fast enough.

There are always a few others in larger markets that also need the full gigabit capability. This would include scientists and engineers who work with huge data sets. I know people who work from home with movie animation who regularly fill a gigabit connection. But these connections are all work-related and represent people who work with large data at the office and who want the convenience of doing so at home. It’s been eight years since Google Fiber got the whole country talking about gigabit broadband speeds—and yet there still are not any killer gigabit applications.

I think we’re finally on the verge of seeing this change. The demand for faster broadband products leaped upward during the pandemic. According to OpenVault, at the end of the first quarter of 2021, the percentage of homes subscribing to gigabit data products jumped to 9.8% of all homes. This grew from 1.9% of homes in 2018 and 2.8% at the end of 2019. This is a profound market change because having 10% of all households subscribing to gigabit broadband means there is finally a potential market for gigabit applications. A company that develops a high-bandwidth application can now be assured that there are enough possible customers to make it worthwhile.

Another factor that makes us ripe for gigabit applications is the continued growth of gaming. It’s hard for folks of my generation to put gaming into perspective. The gaming industry now dwarfs other entertainment segments like movies or television. In 2020, the gaming industry had revenues of almost $140 billion. That includes $73.8 billion for mobile gaming, $33.1 billion for PC gaming, $19.7 billion for game console gaming, $6.7 billion for extended reality, and even $9.3 billion for paid subscriptions to watch others play games.

The gaming industry made a big change just before the pandemic when the biggest game companies moved games to the cloud. The old phenomenon of kids lining up to buy the latest game release at midnight is a thing of the past as games are now introduced online and played in data centers. I think the early big bandwidth applications will be related to gaming—and this is not unusual because entertainment has driven the use of bandwidth in the past—a large percentage of home broadband usage is still to watch video.

The third factor that I think will drive faster broadband applications is generation Z coming of age. This is the generation that grew up with a smartphone in their hands and good home broadband. This is a generation that adapted immediately to homeschooling—while they badly missed their friends and live activities, this is a generation that was already living a large percentage of their lives virtually. Generation Z kids are now in college and will soon be out in the world as a major block of consumers. They will likely be the first target audience for faster broadband applications and are also likely to be the generation that will create many of the new applications.

It’s likely that the big bandwidth applications will involve extended reality, which is an umbrella term that covers virtual reality, augmented reality, mixed reality, and other similar technologies. With gigabit-capable homes as customers, we’ll start seeing games that bring telepresence and virtual worlds into the home using big bandwidth. The United States is ripe for big-bandwidth applications since 10% of homes are buying gigabit broadband products. We have a huge potential market for innovative gaming since over half of the people in the country now play games at least once a month, with tens of millions who play games regularly. All that is needed now is for a few entrepreneurs to see the potential for developing big-bandwidth games. And as it happens with all new technologies, this will grow from a start in gaming to extend to the rest of us.

By Doug Dawson, President at CCG Consulting

Dawson has worked in the telecom industry since 1978 and has both a consulting and operational background. He and CCG specialize in helping clients launch new broadband markets, develop new products, and finance new ventures.

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