Satellite first, FTTH (much) later


Not all crazy ideas are crazy.

Netflix is talking about delivering ultra high definition content to its subscribers, using the 4K video format currently under development. Real time streaming of 4K content will require something like a 100 Mbps to 1 Gbps connection. Or it could be downloaded, over time, to in-home hard drives at slower speeds.

Either way, it would strain existing networks. A gigabit is only possible with fiber. In theory, cable modem service can support 100 Mbps speeds, but only for a very limited number of homes in a given area and only intermittently over long periods of time. Just supporting a constant 10 Mbps stream for a day or two is problematic.

That’s why any nationwide 4K content distribution is likely to first come via satellite.

HBO, for example, could make a satellite stream of 4K content available to a national market of 120 million homes today, for more or less the same cost as deploying that service via a cable or FTTH system that serves a town of 20,000 homes. Even if you factor in the cost of the satellite capacity, it’s still in the same ballpark as building a small FTTH system.

Satellite companies, such as DirecTv and DISH, were the first and most aggressive HDTV content providers in the late 1990s. They made satellite broadcasting’s economies of scale work to their advantage. As more homes bought HDTV sets, the balance starting tipping toward cable companies and they upgraded plant, so they could provide HDTV within their systems, first on a broadcast basis and then, as HDTV penetration grew, as an on demand service.

Eventually online companies, like Netflix, got into the HDTV game. But only because demand for megabit-class Internet service grew to the point where it could be deployed to and adopted by the majority of U.S. homes. HDTV was only one of many factors driving that demand.

It will take ten to fifteen years for the price of 4K technology to drop and consumer adoption to rise to current HDTV levels. At that point, it will be a demand driver for FTTH networks. In the meantime, look to satellite companies to lead.

About Steve Blum

Steve Blum is president of Tellus Venture Associates, a management, planning and business development consultancy for municipal and community broadband initiatives. He is a 30-year industry veteran and an expert in developing new broadband infrastructure and services, including wireless, fiber optic and satellite systems. His career includes playing key roles in the launch and growth of DirecTv in the U.S., as well as other satellite broadcasting platforms around the world. For the past ten years, he has helped build municipal wireless and fiber optic broadband systems. His client list includes many California cities, such as San Leandro, Palo Alto, Oakland, Los Angeles, Lompoc and Folsom. He’s a member of the executive team for the Central Coast Broadband Consortium and has worked with other regional consortia in California. Steve is the author of seven books on the Internet and satellite broadcasting and is a frequent contributor to professional journals and industry events. He holds an A.B. in History from the University of California, Berkeley, an M.A. in East Asia Studies from the University of Washington, and an M.B.A. from the University of St. Thomas. He is a triathlete and multiple Ironman finisher, and is currently ranked in the top 100 of the Challenge Triathlon world rankings, out of more than 30,000 athletes.