Personal tools
You are here: Home Resources Broadband References Customers at the Gate
Document Actions

Customers at the Gate

Exerpted conclusions of a 2002 study on demand for broadband, by Sage Research, Inc., for Cisco Systems.

Customers at the Gate:

Mounting Demand for Broadband-enabled Services

Prepared exclusively for Cisco Systems
February 2002, by Sage Research, Inc.   


Consumers are clearly willing to pay for Internet-delivered services. Even using our most
conservative interpretation of the survey results, their willingness translates into a $25 billion annual opportunity. Surely, $25 billion is a market opportunity worthy of exploration.   Specifically, it’s an amount of money that warrants exploring what we as suppliers, providers, and policy makers can do to ensure the Internet-delivered service potential is realized.

Ensuring this potential will not be an easy task. As reiterated throughout this document,
challenges exist that threaten the market’s potential to be realized. And while some risks will eventually be mitigated through skillful R&D and savvy marketing, those are things that will advance in any competitive market as suppliers continuously refine their approaches in their quests for market share.

What is not purely dependent on the dynamics of competition is the need for ubiquitous broadband access. In this case, evidence of the need for forces beyond normal market dynamics is everywhere from the demise of CLECs to the still dismal penetration rates of broadband to the home. If we want to realize the $25 billion opportunity, we must have broadband access to the home; and as is, the current outlook for ubiquitous broadband access is still quite foggy.

Broadband is critical to the customer experience, and ubiquity is critical to the business case.

Consider the data gathered in this study:

1. The services with widest appeal are those that have multimedia components. A
satisfactory customer experience demands that these multimedia components are
experienced with excellence—which requires broadband. A less-than-satisfactory
experience will derail the demand potential.

2. While impressive percents of U.S. households are likely to subscribe to Internet-delivered services, in some cases the amount they are willing to pay per service is fairly low. This makes sense since many of these services are essentially substitutes—perhaps upgrades, but still substitutes. Still, this creates a business case challenge; volume will clearly have to be part of the solution. And to get volume, providers will need access to a very large population of appropriately enabled households

Let’s take an example. Potential demand for continuing education is one of the most exciting results from this research—possibly a $3 billion annual market. Multimedia components will be part of continuing education offerings—possibly to view lecture videos (real-time or non-realtime), share applications, or participate in online study groups. Further, the most common amount of money consumers are willing to pay per college credit is just $50—far less than what they would be charged by online universities today. So how will universities develop sustainable business models? Most likely, they will need sheer numbers of students in order to achieve profitability. And to get so many students, they will need a large pool of broadband-enabled households to target.


The $25 billion figure is a very conservative estimation based on the primary research
gathered—and very likely under-reports the true annual potential. Still, even with this
conservative number, the economic incentive to vitalize this market exists. What is not so clear is when the combination of regulatory, technical, and market dynamics will converge to allow broadband access become truly ubiquitous. Only then will the customer experience and business case be compelling enough for a viable Internet-delivered service market.

Powered by Plone CMS, the Open Source Content Management System