Convergence is radically changing the possibilities for broadband
In a recent report TeleGeography, a telecoms consultancy, listed the world's ten largest broadband networks by subscriber numbers to fixed services. TeleGeography points out that these ten networks added 23 million subscribers for the 12 months to March 2010, and account for 39 percent of the world's about 492 million fixed broadband subscribers. See the article and the top ten list here. (Note that this list does not include mobile broadband services.)
This list almost hides the important impact of convergence on broadband access. Two of the largest broadband networks in the world, Comcast and Time Warner, are actually what one might call cable TV networks. Both companies began their lives as television content distributors, but now have significant revenues from cable Internet services.
Together, they have about 26 million broadband subscribers, TeleGeography says. Both are based in the U.S., where the other large cable Internet companies include Cox Communications, Charter Communications, and Cablevision Systems add another 13 million subscribers.
All of this means that with convergence, access to broadband will increase. As multiple networks--wireline or wireless--can carry broadband to subscribers everywhere, it is time for Governments to think about the implications for regulation.
This link between convergence and broadband also changes how ICT businesses work. Comcast's quarterly results ending June 2010 show how the company has benefited from a move to convergence. While its video revenues, its core busines, increased 0.7 percent over the quarter, its high-speed Internet service revenues grew by 10.3 percent. Most impressive is that this cable TV company saw revenues from its voice telephony services increase 14.3 percent for the same period. Time Warner has not yet released its Q2 results for 2010, but it has seen similar benefits. Internet revenues for 2010Q1 increased 8 percent over 2009Q1 numbers, and voice revenues were up 9.3 percent.
Even the traditional telcos are not far behind. Verizon, a major telecommunications company most associated with telephone and Internet services, has also begun converged offerings. In its recent quarterly results, Verizon announced that it added 174,000 net TV customers to its fiber optic based FiOS network, talking the number of its TV subscribers to 3.2 million. This was as its original business--wireline telephony--saw a drop of 9 percent in the number of connected lines.
All of this shows that convergence is in full effect. Companies are ramping up revenues in non-traditional business lines, possible because of the phenomenon of convergence and a regulatory framework that has, for the most part, allowed such innovations as cable Internet, VoIP, and IPTV to flourish.
In a report on convergence I co-authored, we had mentioned how a 2004 report by the U.S. Government Accountability Office (GAO) showed that "rates for telecommunications services were generally lower in the... markets with broadband service providers than in the... markets without [such a provider]." Put another way, when competition exists, prices go down and consumers benefit.
The implications are clear: Government need to look into their regulatory frameworks and identify what roadblocks might exist to enabling such innovation and competition in the market. Convergence is proving to be a great benefit in terms of lower prices, revenue growth for firms, and access to advanced ICT.