skip to main content

Straight Talk Consumer and Entertainment Services

Ovum view

Significant R&D and capex investment is going into the broadband network to create the ultimate consumer experience. The goal is to create a network that is not just high speed but has zero negative impact on the consumer application of choice. Based on research carried out by equipment vendor Huawei, this will mean buffering times of less than 100ms, zero video-frame freezing, and response times of less than 0.4ms for gaming.

As per a speech by Gavin Young, Head of the Fixed Access Centre of Excellence at Vodafone Group, at the Ultra-Broadband World Forum, this will result in an "invisible" network. Initially, having such a powerful network will bring the broadband service provider significant market differentiation as there is a proven link between good broadband experience and high customer satisfaction. However, as the broadband operator invests in greater network AI and autonomous capabilities, and the service becomes more dynamic, there is a risk that the provider of that service becomes more invisible. It is vital therefore that at those points where the service provider does make direct contact with its customers, its brand shines very brightly. One of these touchpoints is the humble home Wi-Fi router.


Figure 1: Telcos will be responsible for 174 million device shipments by 2022

Telcos will be responsible for 174 million device shipments by 2022

Source: Ovum


As shown in Figure 1, approximately 80% of all broadband CPE will be supplied through broadband service provider channels by the end of 2018. This percentage will gradually increase so that by 2022 telcos are shipping 174 million broadband routers annually. With broadband CPE being heavily discounted by service providers, this is an expensive business. However, it is essential that rather than being seen only as a cost burden, broadband CPE becomes an area for active investment so that the customer's whole broadband experience becomes optimized, with the broadband service provider's brand being placed at the center of the digital home. Having a fast and reliable Wi-Fi signal to every corner of the home is now equally important to the customer as basic broadband speed. The business case for actually investing in home Wi-Fi is also sound. Investing in the CPE and the overriding software helps to lower overall operational support costs, increases brand satisfaction scores, and can lead onto a number of new service opportunities from multiroom video to consumer IoT cybersecurity. Allowing companies such as Google and Amazon to move into this position in the home, simply to help reduce capex expenditure, would be a huge mistake on the part of broadband service providers and is something they must guard against.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.