Using broadband
Applications over broadband Internet
Broadband arrives at a time when the revolutionary potential of the Internet
has still to be fully tapped, and is serving to accelerate the process of
integrating Internet technologies into everyday life ITU
030123/Corbis |
Broadband arrives at a time when the revolutionary potential of the Internet
has still to be fully tapped. The Internet has already led to the creation of a
host of new applications, including Web surfing, instant messaging, file
sharing, e-commerce and e-mail. Broadband, and its faster “always-on”
connections, is serving to accelerate the process of integration of Internet
technologies into everyday life.
“The dot.com boom was driven by the expectation that the Internet would
create a large market for electronic commerce, on-demand content, and online
applications,” says Tim Kelly, Head of the Strategy and Policy Unit at ITU.
“Broadband brings this expectation one step closer to reality by offering
faster speeds and a better platform for the development of content services. In
other words, the reality is finally starting to catch up with the market hype.”
At the end of 2002, VoIP traffic accounted for more than 10 per cent of all
international trafficITU 030124/Corbis |
The development of broadband content and applications not only needs a large
pipe and suitable technological infrastructure, but also an appropriate strategy
for service evolution, and an adequate environment for the creation of new
content. With broadband, the variety and quality of specialized applications —
for instance online entertainment or educational material — are set to increase
dramatically. But so too will the implications for issues such as intellectual
property rights and security, as more and more material is made available in
digital form and exchanged globally. The “MSBlast” worm is an example of how
the always-on broadband connections make computers far more vulnerable to
infiltration (see our story Broadband and information security).
Broadband also comes at a time of technological convergence, during which
computer applications are spreading to other devices (such as mobile phones and
television sets), and vice versa (for example, voice communications over
computers).
Traditional browsing and person-to-person communications
E-mail and its mobile counterpart, messaging, are not bandwidth-hungry
applications. But higher bandwidth improves these services in two key ways: it
allows for always-on communication and the exchange of larger attachments.
Broadband boosts even the most in-demand and fundamental applications already on
offer today — indeed, one of the main incentives for residential broadband users
is simply to enhance the overall Web browsing experience.
In addition, higher speeds can improve the user’s experience of certain
types of content, for example, product images and software downloads. Broadband
enables shorter downloading sessions. Indeed, some bulk file transfers, such as
software upgrades or audio/video files, are simply not efficient without a
high-speed connection. Broadband is also having an impact on traditional voice
telephony services.
Internet television and home networking
In the broadband era, personal computers (PC) and personal digital assistants
(PDA) are not the only types of terminal for accessing the Internet. Since the
advent of higher-speed networks, manufacturers have been developing other
broadband terminals, such as video game consoles, Internet television
appliances, set-top boxes (STB) and home servers. In Japan, for example, the
latest annual random sample survey from the Ministry of Public Management, Home
Affairs, Posts and Telecommunications (MPHPT) concluded that there were 3.64
million people who accessed the Internet from their game console or from a
television set in 2002.
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Voice services: prices coming down
Voice services over data networks have recently emerged as an alternative to
conventional telephony and the lower cost to users is making them highly popular
in some markets. Running telephony over general-purpose data networks, such as
Internet Protocol (IP) networks, is cheaper due to a number of factors. First,
telephony over dial-up connections, charged at a flat rate, or always-on
broadband connections, avoids the per-minute charges of a traditional public
switched telephone network (PSTN). Second, a long-distance or international call
can be placed through a local call to an Internet service provider (ISP), thus
bypassing the carrier. In North America for instance, where voice over IP (VoIP)
is treated as an “enhanced” rather than a basic service, the ISP can avoid
paying the per-minute access charges that telephone companies are required to
pay to local carriers to terminate long-distance calls.
Figure 1 — VoIP is catching on
Subscriber growth for Japan’s Yahoo BB! Phone service (2002—2003), and
international VoIP traffic summary (1998—2002)
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A number of different technologies can be used in a single “voice over
broadband” call. These technologies include: asymmetric digital subscriber
line (ADSL), IP, asynchronous transfer mode (ATM) and cable modems. For business
applications using broadband, virtual private networks (VPN) have been a source
of significant revenue for service providers. Cable companies have also been
quick to enter the broadband VoIP scene in some markets, notably in the United
States.
Previously, the key barriers to VoIP take-up were not necessarily bandwidth,
but rather the integration of network-based voice telephony with convenient
handsets and call services (such as making a phone call, call waiting, caller
display and voice mail). However, recent VoIP service offerings seamlessly
include these benefits on traditional telephone equipment. In terms of voice
quality, VoIP approaches, or may even match, traditional fixed-line voice.
Many companies have now deployed VoIP solutions. And a number of broadband
providers have chosen to add these solutions to their service packages — in some
cases at very low tariffs. “Yahoo BB!” in Japan, for example, offers its 2.4
million subscribers free calls to one another across the country. Not
surprisingly, subscriber growth has been significant (see Figure
1, top chart).
Calls outside the network in Japan are billed at a flat rate of 2 US cents a
minute, as little as one-tenth the price of the same call over NTT’s network.
Paging buttons have been re-designed to connect, for example, to wireless
handsets of hospital staff anywhere in the buildingITU
030122/Corbis |
Vonage subscribers in the United States, for example, can pay a flat rate of
USD 39.99 per month for unlimited calling throughout the country and Canada via
their broadband connection. Both Vonage and Yahoo BB! are promoting their
services. This marketing push is expected to help convince users that broadband
can be more cost effective than they may think. For example, at the Ann Arundel
Hospital, in Maryland (United States), when patients need an additional dose of
medication or an extra helping of lunch, they are able to make a voice call
directly over the hospital’s Wi-Fi network. Old-style paging buttons have been
re-designed to connect to the wireless handsets of staff anywhere in the
building. Indeed, voice over broadband can transform almost any device (PC,
laptop, tablet PC or medical console) into a voice communication device.
Growth of VoIP traffic is a worldwide phenomenon. At the end of 2002, VoIP
traffic accounted for more than 10 per cent of all international traffic. Only
four years ago, it accounted for a mere 0.5 per cent (see Figure
1, bottom
chart).
Mini television
ITU 030121/Corbis |
Video
With the widespread popularity of video entertainment, video applications are
considered by many Internet users to be the principal raison d’être of
broadband technologies. Even though the quantity and quality of streaming video
is still limited, Internet users can already enjoy live news broadcasts and
pre-recorded programming. And the future promise of such uses is even brighter
as quality increases.
ITU 03092/Philips
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Once video content becomes more widely available, and with higher resolution
and screen sizes, one of the main benefits of broadband connections for users
will be the possibility to watch what they want, when they want. Video on-demand
via broadband is already available in some parts of the world and could
drastically change the way people watch television. As an example, the
broadband portal “now.com.hk” in Hong Kong, China delivers true
video-on-demand to broadband subscribers, including premium content such as
first-run movies or live sporting events.
As early as 2001 in the Republic of Korea, SBSi, the interactive division of
the Seoul Broadcasting System, began offering streaming video programmes, such
as soap operas. The cost to users was 40 US cents a show. The service has
attracted 1.8 million registered users, and many more are signing up every day.
In Japan, users benefit from high definition television (HDTV) programmes
delivered to them directly over fibre-optic connections. These programmes arrive
over fibre and are viewed on the television set, but they could just as easily
be viewed via a personal computer or be saved on the hard drive of a digital
video recorder for future playback. Japan’s fibre networks allow for very
high-bandwidth HDTV signals. However, many DSL and cable technologies are not
fast enough to offer a digital signal for high-definition television. New
compression technologies and faster line speeds continually improve the quality
of the picture above and beyond that of traditional television. However, it will
take some time before broadband television catches up with traditional
television.
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Video-conferencing
ITU 030125/Corbis |
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Broadband comes at a time of technological convergence, during which computer
applications are spreading to other devices such as mobile phones and television
sets, and vice versa (for example, voice communications over computers)
ITU 030126/Corbis |
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Home office with broadband connection
ITU 030128/Corbis |
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Broadband Internet on board aircraft
ITU 030127/Corbis |
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Public services
It is not only commercial, entertainment-oriented applications that are set
to benefit from broadband, but the public sphere also provides a rich terrain in
which to develop and promote services, especially given the price advantage of
broadband over comparable leased-line networks. Moreover, and perhaps most
significantly, it is through the government’s promotion of online services
that economies benefit most in the long term: raising educational and health
standards are recognized factors in improving economic status. Already in some
countries, the public sphere has been transformed by e-government initiatives,
with, for example, citizens filing their tax forms, or registering for various
public services over the Web. These and other public services, such as health
and education, stand to benefit from the possibility of higher-speed
connections, particularly through the extension of access to underserved or
rural communities. Whereas the impetus for commercial services has largely come
from the private sector, albeit on the basis of a favourable market and
infrastructure environment, public service initiatives have been hugely boosted
by governments that have been willing to foster content development with a view
to better meeting users’ needs.
Bundling and unbundling content
In their endeavour to exploit the potential of broadband technology and
services, broadband operators, ISPs, content providers, and the entertainment
industry are studying new partnership models to offer a more complete range of
services and applications and gain access to users, at the same time as
guaranteeing revenues.
In 2001, one of the largest providers of dial-up Internet access, AOL merged
with the entertainment giant Time Warner, and began upgrading its portal for
broadband
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In 2001, one of the largest providers of dial-up Internet access, AOL merged
with the entertainment giant Time Warner, and began upgrading its portal for
broadband, providing more high-bandwidth content, such as full-motion video
news, CD-quality audio, and video from the company’s Time Warner division. In
an attempt to maximize its market and counter the erosion of its subscriber
base, AOL started an unbundled subscription to its portal services in addition
to its standard access package. This is akin to a “bring your own (broadband)
access” (BYOA) solution, and reaches a wider number of broadband users.
However, this strategy did not seem to bring about the desired result, and the
company was losing clients steadily — at least until the deployment of AOL for
Broadband, an effort to convert AOL dial-up customers into broadband users.
A different example of partnership can be found in Japan, where Softbank
Corporation, the holding company of the DSL provider Softbank and the ISP Yahoo
Japan, launched Yahoo BB! — a service providing both broadband access and
innovative high-speed services in the country. By June 2003, Softbank had
managed to attract some 2 822 000 subscribers — about 30 per cent of the market
— thanks to its low prices and diversified services (e.g. IP telephony, WLAN
hotspots, and access to films and other content).
However, the shift from free to paid access, which becomes financially
unavoidable when offering enhanced content, such as movies or music that are
usually subject to copyright, is not easy. Internet customers have exhibited
their unwillingness to pay for such content, especially if it can be obtained
free of charge from an alternative peer-to-peer (P2P) source. Linking access and
content allows players to have a closer (billing) relationship with their
customers. It is akin to a one-stop-shop solution that includes all the services
needed, and gives ISPs the opportunity to diversify their revenues. This is
important when taking into account the decline of the online advertising market.
In the United States for example, Yahoo receives a cut of subscriptions and will
share its advertising revenues with the telecommunication company. Yahoo BB! In
Japan makes a web page available detailing which part of the user’s
subscription rate is for ADSL access (Softbank BB), dry copper line rental
(NTT), ISP (Yahoo Japan) and other enhanced services, such as voice over IP.
There is also a second type of content provider in the Internet market, which
traditionally offers its products offline, but is now exploiting the potential
of the Internet to widen its reach. Newspaper and magazine publishers, for
instance, now offer online subscriptions and news channels, and entertainment
players (recording companies, film industry, etc) are beginning to make their
entrance on the online market.
Traditional multimedia companies are also making an appearance on the
Internet stage. Although there are still many legal and regulatory issues to be
resolved, in recent years many companies have started offering music online. A
recent example is Apple iTune, which allows users to download a single song
starting from USD 0.99. Other services, such as MusicNet or PressPlay, propose a
monthly subscription fee, which gives access to a certain number of services
(e.g. streaming and downloading).
These activities open the door for future developments in the broadband
market. For the time being, however, bundling access and services seems to be
the most viable method to help the diffusion of this service, and to attract
less technology-enabled users.
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