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Demand for Advanced Apps Driving Fiber Investment

According to the latest market study by Point Topic, rapid digital subscriber line (DSL) internet access growth is expected in developing markets, while fiber is set to increase its share in mature markets as demand for high bandwidth applications continues to rise in the leading markets.

Point Topic's latest survey of broadband tariffs around the world reveals a continued decrease in the cost of a megabit. Broadband households today pay on average just half the amount they were paying in early 2008 for their bandwidth.

The findings from the leading broadband analyst firm show that the ongoing reduction to the price of bandwidth tariffs is due to increased competition as operators look to move into new markets for DSL and fiber.

"DSL prices in particular are being squeezed. Competition between operators and access technologies is driving the search for more markets and DSL is well placed to capture customers who don't need full speed 24/7 bandwidth," said Oliver Johnson, CEO of Point Topic.

Johnson added "Many users do not use their broadband for more than a couple of hours a day and when they do it's often for applications that use relatively little bandwidth. They care much less about the cost per megabit, where fibre has the edge, than about the upfront and monthly charges and DSL wins that battle hands down."

However, the next stage in broadband internet access delivery reveals itself in some of the more advanced markets.

"Fiber to the building is a popular way of providing broadband. An increasingly common model in many markets is for multi-tenant housing to get a fiber connection and the bandwidth is then delivered over a LAN to the individual units," said Johnson.

This solution is dependent on the local and national infrastructure and the spread of the population. Nations that lead broadband adoption and usage -- such as Japan, Korea and Singapore -- already have end-to-end fiber to the home. They're seeing significant technology substitution with DSL in particular being replaced by fiber and therefore the rapid adoption of advanced applications.

The result is that the drop in DSL prices is not worldwide, in Asia Pacific costs have increased over the last two years.

Subscriber behavior is changing. The increasing popularity of high bandwidth applications, particularly video, mean that low cost per megabit carries more weight than low subscription costs. Operators are seeking ways of fulfilling existing needs and scrambling to create new ones.

The developing broadband markets will continue to see rapid growth -- particularly in DSL subscriptions in 2011. However, the advent and spread of connected TV is going to be the real news in the mature markets.

Enabling consumers to watch streaming video on their TV sets will drive bandwidth demand up significantly and where fiber is available we'll see appreciable growth in its market share.

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