Discussion Papers

Anna Maria Doose, Alessandro Monti, Ralf G. Schäfer:

Medium-term market potential for high speed broadband access in Germany
No 358 / September 2011
(Full version only available in German)

Summary

Penetration with broadband access lines in Germany was at 26 million homes at the end of the year 2010. The majority of those lines has still low bandwidth connection speed, whereas access lines with higher connection speed – e.g. based on cable or FTTB/H – do only play a minor role from a consumer perspective. Based on these findings, the following study tries to forecast the development of demand potential for high-speed broadband access for private and business customers in Germany within the next five years.

The first part of the study concentrates on applications trends that will shape future usage and demand patterns of private and business internet customers. The analysis identifies as a result a total of seven major trends: (1) Cloud Computing, (2) Media and Entertainment, (3) Gaming, (4) (Video-) communication, (5) Mobile Services, (6) eHome and (7) eHealth. For each trend, foreseeable market developments are presented and implications for the performance of broadband access lines are derived. Along with the necessary bandwidth speed, other quality metrics like traffic symmetry and latency are also elaborated for the application trends.

The second part of the study focuses on future usage patterns of internet customers. Households and businesses are not seen as a whole, but are differentiated into several demand clusters. A specific profile which will give indications on usage intensity for the application trends is derived out of a cluster analysis for each of the identified demand clusters.

The findings in the sections regarding application trends and their technical implications are then finally brought together with the usage profiles of the demand clusters. This allows drawing important conclusions on the demand potential for different types of broadband. Within the next five years, three major potential demand categories can be identified:

  • "Low level" demand for a bandwidth of up to 20 Mbps with a potential of nearly 9.5 million households and nearly 3.4 million businesses.
  • "Medium level" demand for about 60 to 100 Mbps with a potential of nearly 17 million households nearly 165.000 businesses.
  • "Top level" demand for broadband speed of at least 200 Mbps with a potential of nearly 5.1 million households and nearly 54.000 businesses.

The last part of the study sets each of the different demand categories into context with the various access technologies. Satisfying the "low level" demand potential is achieved – under the assumption of major technological enhancements – with nearly all wireline and wireless based access technologies. The adequacy of those access technologies for "medium level" and "top level" demand potentials however is rather limited, particularly with regard to specific characteristics such as "shared use". Notably requirements for the "top level" demand potential of innovative private and commercial clients can be realistically met only with FTTB/H access technologies.

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