The Multi-User Consumer Broadband Mega-Market Opportunity

by | Aug 26, 2001

In one of my past columns, I discussed the challenges facing the deployment of broadband for the masses. I wish to re-visit that subject today. As my readers know, I recently switched from cable modem to BellSouth FastAccess DSL. In doing so, I learned that BellSouth DSL has a single-user self install process for DSL […]

In one of my past columns, I discussed the challenges facing the deployment of broadband for the masses. I wish to re-visit that subject today.

As my readers know, I recently switched from cable modem to BellSouth FastAccess DSL. In doing so, I learned that BellSouth DSL has a single-user self install process for DSL that has been reasonably successful. (I recently read that more than 70% of BellSouth’s single-user customers are self-installs. But even that means the other 30% have problems doing the self-install and require assistance. And neither BellSouth nor anybody else has an effective self-install solution for the fastest growing broadband market: the consumer multi-user market.

Let’s go back a few decades, and fondly remember when we all gathered in the warm bosom of our family in front of the only television set in the house — and fought like hell over what program to watch! Today, most families have several television sets (I’ve lost track of how many we have in our house), and contention for the television is not a problem.

And we are rapidly headed in the same direction with personal computers. According to studies, there are currently about 18 million multi-PC homes in the U.S. This number is forecast to grow to 30 million next year. These numbers may not be 100% accurate, but there is certainly no denying that multi-PC homes is fast becoming as normal as multi-television homes. In my own case, we have four PC’s, three of which are connected to the internet via DSL. (The only reason the fourth PC is not connected is that I didn’t have the foresight to have cat 5 cable run to the room where the fourth PC is located.)

Unfortunately, the task of networking multiple PC’s together to provide file and printer sharing and internet access is still a daunting task for most people. Only a very small percentage of people — those that deal with networks on a daily basis — can set up a home network quickly.

Which brings us to the concept of “acquired skills.” Most of us are able and willing to learn how to perform certain complex tasks if we consider the learning process to be worthwhile. The learning process is worthwhile if we are going to re-apply the acquired skill on a repetitive basis. For example, people are willing to invest the time to learn how to use complex software applications that they will use daily.

But in general, people will only take the time to acquire a skill if it is a skill they will use often. I’ll learn how to change my spark plugs, but I won’t learn how to fix my transmission, thank you very much.

Home networking will never fall into that category of acquired skills for most people. It is a complex task that most of us will undertake once or twice in a lifetime. We don’t want to get good at it. In fact, we can’t get good at it because we just won’t do it often enough — we would have to re-learn the task each time we attempt it. We want somebody else to do it for us, and to fix it if it stops working. And we’re willing to pay somebody to do this, just as we are willing to pay somebody else to repair our transmission.

And that’s why the consumer multi-user market is such a huge market opportunity for broadband service providers. The broadband service provider that is willing to install and service the total multi-user consumer solution — including the last 100 feet — will dominate their local market.

Of course, the cost to the average consumer is not insignificant. It will cost you about $600 to run cable and hook up a home network, set your computers up for file and printer sharing, install a firewall, and provide a residential gateway to your broadband line. A creative business model will be necessary here, as many will not be willing or able to shell out $600 in a lump sum. For example, a DSL service provider could spread the cost over six or twelve months and include it as a line item on the monthly DSL bill. Another approach would be to perform the install at cost and bill a monthly maintenance fee.

That’s not to say that some progress isn’t being made on the do-it-yourself home networking front. A number of companies, such as 2wire, are marketing home networks in a box — residential gateways designed to enable Joe Average to set up their home network. You can buy these types of products at your local computer store. 2wire’s home portal residential gateway has the advantage of being able to use phone wiring to network PC’s, albeit at a slower speed than ethernet. If your computers happen to be near phone jacks, this can save you the cost of running cable. The phone wire connects through an adaptor to your USB port, so you also save the cost of a network interface card. Wireless networking is also an option, although it is fraught with security issues that may doom the industry to failure. And the only problem it solves is the physical cabling problem.

But I think that do-it-yourself home networking products will have only limited success. They might appeal to Joe Way-Above-Average, but they won’t appeal to Joe Average. The underlying task is still complex, thanks to Bill Gates, and home networking products can only go so far to automate it or reduce the complexity. When all is said and done, I believe that it is extremely unlikely that home networking will ever become an acquired skill for the masses. Think about it. We don’t even tape programs on our VCR’s often enough to take the time to learn how to program the darn thing — we sure as heck aren’t going to learn how to install a home network.

We don’t want to have to gather around one PC and fight over what web site to visit, any more than we wanted to gather around one television and fight over what program to watch 30 years ago. And we don’t want to become network engineers to solve the problem.

This is a market that is waiting and wanting to be dominated. Since broadband access is the primary driver for home networking, broadband service providers should seize the opportunity to dominate the market. Is anybody out there listening?

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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