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Re: [OM] Image Storage on the Road

Subject: Re: [OM] Image Storage on the Road
From: Ken Norton <ken@xxxxxxxxxxx>
Date: Fri, 5 Jun 2009 10:47:15 -0500
>
> The funny thing is that the US has a considerably lower broadband
> penetration than places like the Netherlands or Scandinavia. I suspect
> that the large number of internet cafes in London and other big cities
> in the UK is due to the large number of third world immigrants and
> backpacking types who do not lug a laptop around.
>


Yes, that is fascinating. As a former Internet/DSL product manager for an
ISP/Telco, I have several observations:

1. Rural population. Broadband is a distance-limited service and the telco
and cable-tv networks are predominantly where the greatest population
density is. In most non-urban regions, up to 40% of the population lives
outside the circle of coverage. There are new technologies and adaptations
of existing technologies which are allowing us now to extent that circle of
coverage much more, but otherwise it requires the placement of broadband
access equipment (DSLAMS) within 20,000 feet (7000m) of the customer site.
The cost of equipment and high-speed connectivity back to the core for the
equipment can run over $30,000 just to serve possibly no more than 24
customers. We've had places where the costs were completely prohibitive due
to cable/fiber limitations. It costs $200-$300 per port (customer) to serve
broadband in high-density locations, and $1000-2000 per port (customer) in
rural locations. That's just build-out costs, not including ongoing costs of
20% per port of original build-out costs per year.

2. Apartment block demographics. It is unusual in the USA to have apartment
blocks wired out for broadband to each apartment. With the exception of
several large cities here, apartment blocks tend to be lower-income
(sometimes low/no-income). In most cities around the world, apartment blocks
tend to have a higher income ratio. Also, it is not uncommon to have all
apartments within the blocks to be wired or broadband ready. Also, one must
look at what percentage of the general population lives in such apartment
blocks.  As a case in point, I lived in a community of 40,000+ people and
there was ONE apartment complex with just under 400 units. Other than the
occasional 4-8 appartment buildings, all else was one or two family houses.
Also, statistically, there are fewer persons per apartment in the USA than
other countries.

3. Cost of traditional telephone service. Until recently, most countries had
extremely expensive and/or unreliable telephone service. The ability to
control your own communications costs by utilizing voice-over on broadband
has been a tremendous advantage. In the USA, the traditional telephone
service has been excellent and relatively price-stable. However, the
price-structure is changing as telcos try to retain revenues as people
migrate over to cell-phones and voice-over IP.  We see this migration on
residential lines, but any business worth its salt recognizes that
traditional land-lines are still required.  Because of the quality of the
telephone network, there hasn't been the pressure to change technologies as
much as has been in other countries. Voice-over IP really is aweful, but
when your regular telephone network is bad, what's the difference?  (I used
to travel A LOT to western European countries and I have had sufficent
exposure to the differences in the quality of telephone service between the
USA and there--now that I work in the industry I know the specific reasons
why--but a lot of improvement has occured in the past 15 years).

4. Television viewing habits. The USA has one of the highest
time-spent-viewing statistics in the world. Cable-TV (and Satellite TV) have
actually been quite successful in staving off the initial onslaught of
broadband-internet demand.

5. How statistics are calculated.  In the USA, our broadband penetration
numbers are based on Total Number of Households. Many countries calculate
the broadband penetration based on Population.  Other countries base the
statistic on Households Capable of Getting Broadband.  As you can see, it is
possible to greatly skew the statistics based on method.  For example, if
you base it on population and 90% of your population lives in densily
populated areas, you'll get a very high broadband-penetration rate. However,
if you base it on households, you'll find that there is a skewing of the
data towards the rural with a much lower broadband-penetration rate. Also,
since the USA numbers are based on Households, nearly all households are
capable of telephone service whether they can receive broadband or not, but
in many countries, there is no telephone service in rural areas at all. It
is not uncommon for the elderly to not be included in the statistics.

6. Wireless overlay.  Locations, such as Singapore, have a near total WiFi
overlay over the entire city. These systems have a two-fold purpose as they
are built for public-safety (fire, police, rescue) as well as having a
public-WiFi connectivity. When calculating broadband penetration, anybody
within the WiFi cloud is usually considered to have broadband whether they
even own a computer or not.

7. At work broadband access.  Many times the surveys skew the statistics by
asking if the user has access to broadband at home AND at work. The USA
statistics track these seperately.

I believe that you can use your eyeballs to actually get a more accurate
representation of broadband penetration.  As we've been discussing, in the
USA we have coffee shops and libraries with WiFi, and the occasional
community WiFi overlay. But we have next to no Internet Cafes. Why is that?
Because most people who use computers have their own broadband connection or
have adequate access elsewhere. Locations where Internet Cafes are popular
tend to serve a population without computers of their own or without
Internet access in their own homes. Strangely enough, some of these
locations with large concentrations of Internet Cafes also report the
highest broadband penetration.  Which do you believe?

Yet, I will acknowledge that the Netherlands definitely does have an
inordinate penetration of broadband.  We have a couple of Dutch communities
here and the funny thing is that they too have extremely high usage numbers,
so I suspect that it is somehow cultural.

Within the industry, broadband penetration statistics have been a topic of
discussion for years. We did our own research into this and even adapted the
numbers based on survey methods. What we found was that the statistics were
much closer than they appear.  We know, for example, that approximately 30%
of the population will never be served by broadband unless there is a
government mandate and taxpayer paid access. This has nothing to do with the
providers, but the fact that these people either do not want it or are
financial deadbeats. We know where our topout point is and beyond that
topout point, growth is limited to population increase or customer swapping
with other providers.  If our MAXIMUM paying customer penetration is 70%, I
can't imagine that other countries can be much better, so when you see a
statistic like 85% penetration, it really makes one wonder.

AG-Schnozz
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