Broadband Communications 6/22/

Broadband 2

Broadband  The International Telecommunication Union (ITU) defines broadband as a network offering a combined speed equal to, or greater than, 256 Kbit/s in one or both directions 3

Which fixed broadband technology are you using at your home? 4 1. DSL 2. Cable modem 3. Fiber-To-The-Home 4. Don’t know 5. No fixed broadband access

From Narrowband to Broadband  Fixed Broadband: DSL, Cable modem, FTTH, Power lines  Mobile Broadband: W-CDMA, CDMA 2000, HSDPA  Portable Internet: WLAN, WMAN, WiMAX  Differences between narrowband and broadband –Higher speed data transfer –“always on” connection –Low latency (Ability to send and receive data packets with little, or no noticeable delay) –Variety of applications (e.g. VoIP, Online Game, MP3 music download, IPTV, mobile TV) 5

Broadband Diffusion 6

Broadband Deployment and Information Society  Widespread broadband diffusion encourages innovation, contributes to productivity and growth, and attracts foreign investment 6/22/20167

OECD Fixed Broadband Subscription by Technology (2010) OECD Fixed Broadband Subscription by Technology (2010) 8

OECD Fixed Broadband Deployment Ranking (2013) OECD Fixed Broadband Deployment Ranking (2013) 9

Mobile Broadband Subscriptions Per 100 Inhabitants (OECD, 2013) 10

Theoretical Backgrounds of Broadband Diffusion 11

Platform Competition  Competition among several different broadband platforms  Inter-modal competition 12 6/22/2016

Platform Competition  Competition among several different broadband platforms (Inter-modal competition)  Platform competition in network industry involves competition between technologies that are not only differentiated, but also are competing networks  Crucial for reducing prices, improving the quality of service, increasing the number of customers and promoting investment and innovation 13

Platform Competition Platform Competition and Broadband Penetration Rate in Denmark ( )) Platform Competition and Broadband Penetration Rate in Denmark ( )) 14

What about mobile OS competition? 15

Smartphone Mobile OS Market Share 16

Network Effect 6/22/201617

Have you ever visited e-bay website? Yes 2. No

Network Effect  Higher usage of certain products or services makes them more valuable  Purchase of a good by one individual indirectly benefits others who own the good 6/22/

Network Effect  Network effects become significant after a certain subscription percentage has been achieved, called “critical mass”. critical masscritical mass  At the critical mass point, the value obtained from the good or service is greater than or equal to the price paid for the good or service.  (e.g.) E-bay, social networking website 6/22/

Critical Mass & Network Effect 21

Network Effect & Broadband Diffusion  Broadband Penetration: Japan (DSL) 6/22/ Fig. 5 DSL Penetration - Japan -2% 0% 2% 4% 6% 8% 10% 12% Year

Network Effect & Facebook User Growth 23

Leapfrogging & Broadband 6/22/201624

Leapfrogging Theory  A theory of development in which developing countries skip inferior, less efficient, more expensive or more polluting technologies and industries and move directly to more advanced ones 25

Leapfrogging Theory: Example Countries which move directly from having no telephones to having cellular phones. In 2006, mobile penetration rate (21.5 per 100 inhabitants) in Africa was much higher than the penetration rate of fixed telephone (3.1 per 100 inhabitants) (ITU, 2007). 26

Leapfrogging Theory: Example In Nigeria, telephone lines are unreliable and limited in their transmission capabilities. The Africa ONE project is attempting to connect Lagos (Nigeria’s economic and commercial capital) to Europe with ultra fast fiber optic cables buried underneath the Atlantic Ocean. Through this fiber optic cable, Nigerians could use the Internet and a local telephone call, instead of using an unreliable telephone system. 27

“Digital Divide”? 28

Leapfrogging Theory Please make a team (five students) for discussion!!! 29

Application of Leapfrogging: Developing countries may move directly from 2G mobile technology to 4G mobile technology. Do you agree? If you agree or disagree, why or why not? Strongly Disagree 2. Disagree 3. Neutral 4. Agree 5. Strongly Agree

4G Mobile Technology  Fourth generation of cellular wireless standards  Example: WiMAX, LTE, HSPA+  100 Mbit/s for high mobility communication (such as from trains and cars)  1 Gbit/s for low mobility communication (such as pedestrians and stationary users) 31

Path Dependence  Path dependence refers to the “dependence of a system or network on past decisions of producers and consumers.”  “History matters” or “Self-reinforcing” 32

Path Dependence  (e.g.) QWERTY keyboard: The current dominance of the QWERTY keyboard today is not thought to be due to its superiority for typing but because it was invented earlier than the Dvorak keyboard Inferior standards can persist simply because of the legacy they have built up. Inferior standards can persist simply because of the legacy they have built up. 33

Path Dependence & Public Policy  Implication: The claim of path dependence is that people often either ignore those interconnections or only look at them in a narrow and myopic manner, and so they get locked in to bad solutions.  Application to the 3G mobile standard policy  Path dependence induces an inefficiency arising from small differences in initial managerial decision-making and public policy-making, which lead to outcomes that are likely to be costly to change 34

Adoption Factors of Broadband 35

Policy/Regulation: LLU  Local Loop Unbundling: The process of requiring incumbent operators to open, wholly or in part, the last mile of their telecommunications networks to competitors  Benefits:  Introduction of competition in the DSL markets  Lower prices  consumer benefits in the near future through open access to competitors 36

Policy/Regulation: LLU  Costs:  LLU may confiscate incumbents’ property  LLU may reduce incumbent’s incentives to invest in new telecommunication technologies  Summary: LLU stimulates the competitive effect by opening up an incumbent network for competitive access (Intra-modal competition) (Intra-modal competition) 37

Policy: Standardization  Standard: Set of technical specifications that enable “compatibility” between products  Compatibility: Two complementary components A and B are compatible when they can be combined to produce a composite good or service  Compatibility may lead to more efficient outcomes in the market 38

Policy: Standardization  Question: Which standardization policy is more effective for the diffusion of mobile? - Market mediated multiple standards? - Market mediated multiple standards? - Government mandated single standard? - Government mandated single standard? 39

Industry Factors  Competition (Intra and inter-modal competition)  Service Price  Application Price  Speed 40

Demographic Factors  Income  Education  Population density  Share of urban population  Age 41

ICT Factors  PC Penetration  Broadband Application/Content  Internet Usage 42

Other Factors for Promoting Broadband  Public awareness (demand)  Government Programs (national plan?)  Innovative ideas to expand broadband network  Marketing  Culture 43

Team Any questions?