Build it! ... But What If They Don't Come?

13 Pages Posted: 27 Jun 2013  

J. Scott Marcus

Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste (WIK)

Dieter Elixmann

Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste

Date Written: March 13, 2013

Abstract

In a recent study, we found that average demand for bandwidth in the recent past, and also in the future according to reasonable projections such as the Cisco VNI, is far less than most analysts have assumed. Even in 2020, average peak hour demand per broadband/NGA user can be expected to be not more than 2 Mbps. This finding would appear to represent very good news for the Digital Agenda for Europe (DAE), and in particular would seem to imply that there is more scope than many have assumed for network infrastructures such as DOCSIS-enabled cable and LTE that depend significantly on shared bandwidth to meet realistic DAE needs for 30 Mbps and even 100 Mbps ultra-fast broadband service well into the future.

The finding also raises complex questions, however, about the nature of consumer demand for broadband bandwidth. It is clear that lack of bandwidth can suppress consumption of network bandwidth. One might well imagine that consumer bandwidth consumption is largely independent of the speed of network access, as long as the capacity exceeds the demand ("offered load", as a queuing theorist would call it). Overall, this view would hold that too little bandwidth can reduce consumption, but that "too much" bandwidth availability cannot promote bandwidth consumption.

Some have argued that bandwidth plays a role well beyond this – that the presence of high bandwidth access promotes creation of new services, and thus consumption of whatever bandwidth is available. This alternative view is analogous to the common observation that no matter how many closets a house has, they tend to quickly be filled up. The difference is important for policymakers, and cannot be resolved by abstract reasoning alone. This is an empirical question.

We have conducted a preliminary assessment that, while not definitive, strongly suggests that whatever "build it and they will come" effect might exist cannot be very strong. This in turn poses troubling policy questions as regards public policy to promote the deployment of ultrafast broadband.

Suggested Citation

Marcus, J. Scott and Elixmann, Dieter, Build it! ... But What If They Don't Come? (March 13, 2013). Available at SSRN: https://ssrn.com/abstract=2285113 or http://dx.doi.org/10.2139/ssrn.2285113

J. Scott Marcus (Contact Author)

Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste (WIK) ( email )

Rhöndorfer Str. 68
53604 Bad Honnef, 53604
Germany

Dieter Elixmann

Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste ( email )

Rhöndorfer Str. 68
53604 Bad Honnef, 53604
Germany

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