Parks Associates Blog

Tuesday, October 26, 2010

Worldwide broadband households to hit 530 million by year-end; residential gateways top 130 million households

Key Numbers
  • Worldwide residential broadband subscriptions are expected to grow from 530 million at year-end 2010 to more than 730 million by year-end 2015.
  • Worldwide households with home networks will grow from 50% of all broadband Internet households to nearly two-thirds by year-end 2015.
  • Global households with residential gateways are expected to grow from 130 million at year-end 2010 to more than 300 million by year-end 2015.
  • Potential connected home revenues for broadband service providers and managed video operators are expected to grow from $16 billion by year-end 2010 to more than $60 billion by year-end 2015.
Inside the Digital Living Forecast Workbook
As the Broadband World Forum kicks off in Paris, France, today, Dallas-based Parks Associates forecasts that worldwide households with broadband Internet service will reach 530 million by the end of 2010. With the strong growth of home broadband connections, service providers are taking a more active role in deploying residential gateways to centralize the delivery of access services and enable new value-added connected home services. The number of worldwide households with residential gateways is expected to exceed 130 million by the end of this year. By 2015, these numbers are expected to grow to exceed 730 million broadband households and 300 million households with residential gateways.

This data comes from Parks Associates newly-released report Digital Living Forecast Workbook, a set of worldwide forecasts in 16 categories including television services, home networks, smartphones, mobile TV, HDTVs, game consoles, and Blu-ray Disc players.

The New Broadband Internet Service Provider Mindset
The mindset under which broadband service providers develop and deploy services is evolving due to two important variables:
  • Broadband as a lone service is becoming highly commoditized; as a consequence, “speeds-and-feeds”-based marketing is changing as consumers can get the same or similar services from other providers. In fact, Parks Associates’ research finds that one-half of U.S. broadband households are not aware of the broadband speed they are receiving! This finding indicates that provider promotions on speed alone won’t work. Successful marketing must focus on other factors, such as bundles that combine broadband services with other core access services, high reliability, customer support, and compelling add-on services.
  • As competition increases, customer satisfaction and retention strategies become more important. The ability of service providers to offer unique value-added services to their customers is important to retaining customers. Later on, these value-added services will create new revenue streams from high percentages of their subscribers, but providers first must sow the seeds of higher customer satisfaction for their current subscribers.

With the widespread deployment of broadband Internet services and residential gateways comes the opportunity for service providers to strengthen customer satisfaction and potentially grow revenues via the delivery of connected home value-added services.

Moving the broadband service value proposition beyond mere “speeds-and-feeds” includes the provisioning of value-added services that can increase customer satisfaction and create new revenue opportunities. Additional service offerings will fall into one of several categories:

  • Entertainment: Access to exclusive music, video, and game content; the multi-platform availability of this content, both in and outside of the home.
  • Lifestyle: Additional e-mail features (larger storage), calendaring, photo and video storage and sharing, and online storage and backup for data and digital media.
  • Premium Technical Support: Phone, chat, remote, and in-home troubleshooting and fixing services; CE device setup and configuration; managed Internet security and parental control; and additional warranties and damage protection.
  • Home and Health Management: Web cameras monitored from Web-connected devices and TVs, energy management features, and health tracking services (vital signs and health monitoring devices).

Consistent with previous Parks Associates’ previous research, recent research shows consumers rating technical support and certain lifestyle value-added services as most highly valued additional services.

We anticipate that the service provider revenue opportunity in the connected home can potentially exceed $60 billion by 2015. This projection is built in the following core services:

  • Video-on-demand;
  • Health monitoring;
  • Residential energy management;
  • Premium technical support;
  • Smart home applications; and
  • Safety monitoring.


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