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Cisco/Oxford Broadband Quality Study Backs Telco 2.0 on Fibre

Remember this post from April? Especially, do you remember this chart?

We identified four groups of countries from the plot of price per megabit vs. average speed:

  1. High bandwidth, low price countries (green box) - South Korea, Japan, France, Finland and Sweden have 16Mb/s average broadband capacity, enough to receive two high definition tv streams or a variety of other services per household
  2. Moderate bandwidth, low price countries (blue) - US, Canada, the Netherlands and Germany have 4Mb/s+ average broadband capacity, enough to comfortably take standard definition TV plus other services in parallel
  3. Low bandwidth, low price countries (yellow) - UK, Spain, Italy and Hungary
  4. Low bandwidth, high price countries (pink) - Many eastern European and developing countries, which have broadband at video TV quality or worse and where price is the barrier to heavy use.
And we drew some conclusions from this -
The first group was essentially the poor; the second and third both consisted of markets where there was extensive unbundling or bitstream-based competition, and really they should be taken together for these purposes; and the fourth was an odd and heterogenous one, which only had in common that they had a strong tradition of public-sector planning and infrastructure investment. Perhaps the most interesting detail was what we didn’t find; there was no fifth group worth mentioning where FTTH was available, but only at a steep price. Below the sort of pricing you expect for leased lines, the market wasn’t providing real broadband to those who could afford it.

This week, Oxford University’s Said Business School and the University of Oviedo published a study (sponsored by Cisco) into broadband quality worldwide. Download the report here. Here’s a chart with their headline findings that seems to bear us out.

saidbqs.png

There are some detail differences. France is in group 1 in our analysis and group 2 in theirs, but there is a very simple explanation for this - the SBS/Oviedo/Cisco study doesn’t take any account of price, and it’s a crucial variable in ours.

saidbqs1.png

Similarly, this chart of “broadband quality leaders” bears a close resemblance to the choice between technocracy or anarchy we identified in this post.

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Comments

Hi,

As you mention different aspects have been evaluated by Telco2.0 team and the Oxford/Oviedo team.

Interesting is that Oxford/Oviedo defined a score (measureing price, competiton, etc) and Telco2.0 price/Mbps. In your prvious post, however, I do not see a correction for price parity. Furthermore, in recents months many Cable companies have started rolling out Euro Docsis 3.0 (both network and modems) drmatically pushing the average bandwidth (and falling prices per Mbps capacity sold).

Perhaps worth making a second version by the en of the year to reflect any changes and coorected for (some) purchasing price parity.

Best Regards,

Colin

The reason why the Oxford-Oviedo study includes no price is because the team found no correlation between quality and price (adjusted to PPP). The team did not find correlation either between penetration and price. The rationale for this "startling" finding could be that telcos have not really marketed actual broadband quality but rather bandwidth/price, which is not correlated to actual quality either, and since consumers cannot discern between a good or a bad offer they cannot discriminate with their wallets either. This should present an opportunity for proactive telcos that do offer quality broadband to extract a well deserved premium.

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