Hi, here an excerpt from a blog entry over at Telco 2.0. I put the two most relevant lines for me in bold..

Who finances broadband access networks? End-users, municipalities, content providers, merchants, advertisers?

Broadband is heralded as the golden growth opportunity for fixed and mobile telcos and a driver of economic and social well-being for local and national communities.

However, recent studies of the advanced markets in Japan and South Korea are demonstrating that the costs of providing broadband access rise faster than revenues.

This leads to a.) an unsustainable business model for network operators and b.) causes them to be a bottleneck in many internet value stacks with major repercussions for all parties.

This is driven by five key trends:

– Growth slows as the broadband access market saturates
– ‘Flat-rate’ pricing models continue
– Inability to capture enough value-added services to cross-subsidize
– Per-subscriber usage increases, possibly significantly
– Bandwidth costs don’t drop as fast as usage rises

This problem will soon heavily affect fixed line operators, cablecos and ISPs in most of Developed Markets and mobile operators too as they increase adoption of HSPA and 3G.

The key questions, then, are:

How can we provide a return on network investment without discouraging innovation by users?
– In the short term, what are the alternatives to ‘flat-rate pricing’?
– What architectural changes are needed to the internet?
How should we think more creatively ‘downstream’ (about users, communities, and municipalities) as well as ‘upstream’ (content providers, merchants, and advertisers) to develop more sustainable business models?

Advertisements