Monday, April 15, 2013

What Does the ISP Market Look Like in 2015?

ISPs are Becoming 'Access to Video' Providers.

"Any way one looks at the matter, Internet service providers (ISP) are becoming "access to video" providers, just as most connected computing devices are becoming content consumption devices," writes Gary Kim.

50% of Wireless Traffic is Now Video!

Is that why DISH just bid $25.5 billion for Sprint???

"US government officials continue to talk about 100 million US residents having access to 100 Mbps Internet access service by about 2020, and others talk about the 1-Gbps future, not every ISP will view those goals as particularly helpful," writes Gary Kim. "In fact, it is reasonable to argue that such speeds will be positively damaging for the market positions of some providers." Many providers don't see 1GB to the home as profitable - "With that in mind, it’s no easy matter to build a fiber-to-home network and make enough profit to justify the effort." Look at FiOS.

"Some eight or so years ago, Verizon launched FIOS, suggesting Verizon would spend $23 billion to reach 17 million homes. That implies a total of about $1,350 per home passed. Of course, Verizon has since suspended its FiOS program for new areas, and has seen a lower cost per home passed."

The FTTH Council says that fiber to the home costs are down 20%.

ISPs will Need 'More Symmetrical' Links: as cloud services grow, so too will the demand for upstream bandwidth. The move to cloud is making DSL look like 4G -- as a cheap backup plan.

Taking all of this into account, what does an ISP look like in 2 years?

The smart ones have started building out network or migrating to a cloud services provider (or broker). The others will ride the revenue to the end. The RBOCs - ATT and VZ - don't want to be in the DSL space anyway. This will only hasten the end for some ISPs.

Cable won this war.

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