Tag Archives: 4k

More video devices, over-the-top subscriptions drive broadband demand

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A couple more data points to add to the how fast is fast enough discussion: Parks Associates, a market research company, just published a report showing that consumers are paying for more Internet video subscriptions and buying more devices to watch them on…

U.S. broadband households have on average more than seven video access devices, including TVs, computers, tablets, and smartphones…

“Nearly 40% of U.S. broadband households subscribe to multiple [over-the-top] video services, and consumers expect to access their high-quality content on any platform, at any location where they live or go for work or fun,” said Elizabeth Parks, SVP, Parks Associates.

While most U.S. homes subscribe to either one Internet video – i.e. over-the-top – platform or none, the number buying everything in sight is growing. Combine that with the fact that those homes have the means to watch several different streams at once, and you come to question of how much residential bandwidth is needed now, and will be needed in the future?

Many of those devices will be 4K – ultra high definition – capable. By the end of next year half of U.S. households will have 4K sets. Adding in computers and mobile devices that already have ultra high resolution displays gets you to the reasonable assumption that it’ll soon be commonplace, if it isn’t already, for homes to access multiple 4K streams at the same time.

Broadband service at 25 Mbps download speed is enough to support a single 4K stream, after allowing for nominal congestion and other baseline household needs, such as web browsing or home automation. But given that each stream chews up a steady 15 Mbps, 25 Mbps won’t be enough when – not if – someone wants to watch something else.

Outside of California, the debate centers on the federal standard of 25 Mbps download and 3 Mbps upload speed – is it enough? Here in the Golden State, though, lawmakers are listening to telco and cable lobbyists, who want to protect monopolies from consumer expectations, and lowering standards, most recently to 6 Mbps down/1 Mbps up. That’s certainly not enough.

15 Mbps is the holy grail for 4K video

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Different online video companies put it differently, but the net result is the same: if you want to watch 4K streaming video – aka ultra high definition – you need a broadband connection that reliably delivers 15 Mbps and has enough head room to support whatever other Internet traffic is passing in and out of your house.

A story by Rob Pegoraro in USA Today provides a run down of the 4K bandwidth recommendations from the two big dogs in the over-the-top video game…

  • Amazon says “you need an Internet connection of at least 15 Mbps to watch videos in UHD”.
  • Netflix recommends “an internet connection speed of at least 25 megabits per second to stream Ultra HD titles”. But it also says you’ll burn through 7 gigabytes an hour of your data cap. Taking rounding into account, that’s the same as saying you need a steady stream at 15 Mbps over the course of that hour.

Given that Internet service providers don’t really promise to deliver a particular service level – typically, speeds are offered up to a certain level – a 15 Mbps download package won’t cut it. So Netflix’s 25 Mbps recommendation is a little more realistic, assuming you’re the only person in your home and you turn everything else off.

That rate coincides with the Federal Communications Commission’s 25 Mbps down/3 Mbps up standard for advanced services capability.

It’s also where the market is heading. Big cable companies, which typically offer download speeds starting at 60 Mbps and frequently climbing to 200 Mbps or more, own 61% of U.S. broadband subscribers. Telcos, which have a 34% market share, struggle to get to 25 Mbps on even recently upgraded and well maintained copper systems.

With 4K television sets expected to be in half of U.S. homes by the end of next year, the gap between cable and telco market share, and the gap between cable-rich urban and telco-monopoly rural areas – will continue to grow.

4K TV will be in half of U.S. homes by end of 2019

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The consumer adoption rate of 4K television sets blew past last year’s expectations, climbing to 25% of U.S. households by January 2018, according to the Consumer Technology Association (CTA). My rough estimate that ultra-high definition 4K sets would be in 20% of U.S. homes by the end of 2017 was low. The adoption rate grew even faster, amidst falling prices, increased content availability and 4K’s status as the default standard for large screen TVs (50 inches and larger).

CTA isn’t releasing a household penetration projection for 2018, but its U.S. Consumer Technology Sales and Forecasts (January 2018) report predicts that 22 million 4K sets will be sold in the U.S. this year and 25 million in 2019 (versus 17 million in 2017). That would imply that the 4K adoption rate will continue to accelerate in 2018 and 2019.

There are 120 million homes with televisions in the U.S. A 25% adoption rate translates to 30 million with at least one 4K set. If all 22 million of projected unit sales ended up in homes without a 4K set, then the adoption rate would climb to 43% by the end of this year. But some of those sets will end up in homes that already have one – as replacements or second (third, fourth…) sets – and in commercial establishments.

Let’s do the same kind of back-of-the-envelope estimating as last year (which turned out to be conservative). Make a wild guess and say a fifth of sets sold will end up in existing 4K homes and another fifth will go to bars, offices and other businesses. That leaves three-fifths to add to the 4K universe, which would result in a 36% adoption rate at year end 2018, and 49% by the end of 2019.

In other words, the number of U.S. homes with 4K viewing capability – and commensurate bandwidth demand – will all but double in two years.

Video product demand shifts away from TVs in U.S. homes

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U.S. consumers are buying bigger TVs with better picture quality – 4K ultra high definition sets selling fast and could be in 20% of homes by 2019 – but their love affair with the small screen could be on the wane as they increasingly turn to even tinier displays. That’s the conclusion of a periodic survey by the federal energy department.

The study was conducted by the Energy Information Administration (EIE), an agency that, among other things, analyses adoption of consumer electronics products in order to track and forecast household energy use. Televisions and other video display products “account for about 6% of all electricity consumption in U.S. homes”, but the product mix is changing…

An average of 2.3 televisions were used in American homes in 2015, down from an average of 2.6 televisions per household in 2009. The number of homes with three or more televisions declined from the previous survey conducted in 2009, and a larger share of households reported not using a television at all…

Entertainment and information devices, in particular, vary by age: younger households tend to have a lower concentration of televisions per person and a higher concentration of portable devices such as laptops and smart phones.

The percentage of TV-free homes has doubled since 2009. In previous surveys going back to 1997, the fraction of U.S households with no television set at all held steady at around 1.3%. That figured jumped to 2.6% in 2015. The past six years have also seen a drop in the proportion of homes with three or more TV sets – it grew fairly consistently from 30% in 1997 to 44% in 2009, but then fell back to 39% in 2015.

Age is also a factor. The younger the household, the more likely it is to have fewer TVs and more smartphones and laptops, while older households have more televisions and desktop computers.

Broadband capacity crunch looms as 4K adoption accelerates

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Broadband hits the video wall.

On current trends, at least 25 million U.S. consumers will be watching ultra high definition video programming via 4K television sets within two years. That’s a very rough estimate, but if it’s off, it’s probably low. But let’s run with it for the moment.

It means that at least 20% of U.S. homes will be looking for 4K-quality video programming. Satellite is a natural source for it and cable companies will try to push some through as well. But much of the new, original programming that’ll be available will be produced by over-the-top video platforms like Netflix or Amazon, and consumers will want to watch that too.

Right now, it takes a steady, 15 Mbps streaming connection to watch 4K video via the Internet, and there’s no immediate prospect of minimum speeds dropping significantly.

That has big implications for the broadband business. Watching 4K via DSL will be impossible for most subscribers and very difficult for the rest, and you can forget about trying to do it via any kind of affordable wireless connection. Cable modem service can deliver enough speed to a home, but there’s a backhaul bottleneck that will limit the bandwidth that’s available on an aggregate, neighborhood basis. If a fifth of the subscribers on a 500-home node are watching one 4K stream each, you’ll need a gigabit and a half of steady backhaul, and that’s out of the reach of many, if not most, cable systems. Depending on design and provisioning, fiber networks can have similar capacity constraints.

The fall back excuse that Internet service providers – cable, telco and all flavors of wireless – trot out when defending poorly performing systems or pressed about upgrade plans and the need for competition is no one actually needs that much bandwidth. Even if it was a valid argument in the past, the adoption rate of 4K televisions sets and service is quickly rendering it completely false.

4K TV sales growing, with 20% U.S. market share in sight

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About three-quarters of all large screen televisions – those more than 50 inches – that were sold last year in the U.S. (and worldwide) were 4K, ultra-high definition (UHD) sets, according to Paul Gagnon, the director of tv sets research for IHS Markit. By 2018, all but 100% of big screens sold will be 4K-capable. In raw numbers, the Consumer Technology Association – the trade association for the U.S. consumer electronics industry – estimates that more than 80 million 4K sets will be sold worldwide this year, and next year the total will be in the 100 million unit range.

Adding CTA’s numbers up, by the end of 2018, there will be something like 300 million 4K television sets in homes and business worldwide. We don’t have sales figures for 2016 yet, but in 2015 the U.S. accounted for about 20% of 4K sales. That share appears to be dropping, though. According to CTA, 4K sales in China have been accelerating and account for the largest chunk worldwide. But even if you discount the U.S. share by half – make it 10% – we’re still looking at something like an addressable universe of 30 million 4K sets.

If you make another back-of-the-envelope cut and say that about a fifth of those – 5 or 6 million – are used in commercial establishments or for industrial purposes, then the ballpark estimate is that within two years, 20% of U.S. homes will have 4K UHD sets.

That’s good news for the consumer electronics industry, which has seen falling television sales. CTA estimates that worldwide TV sales have slipped by about 20 million units since 2014 and the dollar value is dropping even faster, at more than 10% per year. A quantum jump in picture quality will be a good reason for consumers to replace HDTV sets that are still working just fine.

Broadband needs to be faster, because 4K isn’t getting slower

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But the test pattern is marvelous.

The speed required to deliver 4K video via the Internet is still 15 Mbps. That was the consensus at CES two years ago, and it is still the minimum speed that Amazon recommends for its 4K video streams, according to B A Winston, the global head of video playback and delivery for Amazon Video.

He was on a 4K panel at CES last week, and said that Amazon’s challenge is delivering content over unreliable networks – more bits means more congestion – and working within the limits of whatever connectivity and technology consumers bring to the table. “Our goal from a consumer perspective is it should not matter to them”, he said.

Amazon started streaming, and producing, 4K content two years ago, and now most of its content is shot in that format. The number of subscribers viewing those streams has tripled over the past year.

Winston said that they have to consider the device a viewer is using, the viewing software on that device and their own delivery system in order “to figure out exactly what is the best optimum path to deliver to consumers over that device”.

It doesn’t always work. The quality of online streams will dial down to match the connection, but past a certain point, that means dropping down to a lower quality format. That’s an opportunity for studios that release titles on disc, said Ron Sanders, the president of worldwide home entertainment distribution for Warner Brothers, who was also on the panel.

Figuring out the optimum path includes dealing with quality of service issues, such as network congestion or jitter, that crop up. There’s a limit, though. Amazon and other online video platforms will do what they can, but if your device doesn’t have a connection that will move enough bits quickly enough – 15 million of them every second – then you won’t get a 4K stream in real time.

California broadband improves but still falls short of excellence

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Average Internet speeds continue to rise in California and across the U.S. Akamai’s quarterly State of the Internet report shows the average Internet connection from Californian users to its content distribution network servers at 15.3 Mbps in the fourth quarter of 2015. That’s a 22% increase from a year before, and more than double – 107% – from three years before, when the average California connection clocked in at a mere 7.4%. Other states saw similar improvements…

In the fourth quarter, average connection speeds among the top 10 states continued the momentum from the third quarter with robust increases seen across the board…All 10 states had average connection speeds meeting the 15 Mbps threshold — up from 8 in the previous quarter—but none had average connection speeds reaching the FCC’s new 25 Mbps broadband threshold.

Looking across all 51 states [including the District of Columbia], 49 saw average connection speeds above the 10 Mbps threshold compared with 44 in the third quarter. Kentucky and Alaska—the two states with the slowest speeds—were not far behind the rest, both seeing average connection speeds of 9.8 Mbps

California did not rank in the top 10, falling far below Delaware’s 20.4 Mbps average and trailing behind tenth place Washington’s 16.7 Mbps mark. Even so, one-third of Californian users were at or above the 15 Mbps level, which is a significant benchmark – that’s the point at which the connection would support 4K video service.

California still has work to do, with 14% of Akamai users falling below the 4 Mbps level, which is the rock bottom standard used by federal agencies to determine whether an area – usually rural – is served or not.

Chinese policy builds parallel demand for tech, broadband

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4K televisions and home automation, two product categories that are particularly tied to broadband demand, grew significantly in 2015 and the trend is expected to continue into 2016, according to market research presented yesterday at CES in Las Vegas, by the show’s organiser, the newly rechristened Consumer Technology Association.

Home automation accounted for about 9 million units. The $1.2 billion in revenue that generated is an 18% bump over 2014.

On the other hand, CTA researcher Steve Koenig said it looks like 13 million 4K sets sold world wide – outside of China – in 2015. The 4K forecast for the world, again outside of China, is 19 million units in 2016, a growth rate just under 50%.

The real story, though, is what’s happening inside China. Koenig said that 29 million 4K televisions will be sold in China alone in 2016, bringing the global total to 48 million sold this year. In 2015, 27 million 4K sets were sold in China, an even bigger proportion of the global total. Part of the reason is undoubtedly due to economic growth simply making it possible for more Chinese households to buy televisions. Even if 4K sales represent a small fraction of the total, it’s still a lot in absolute terms.

“It’s a numbers game”, Koenig observed. But it’s also a matter of government policy.

“There’s a wish on the part of the central government in China to drive these technologies into the market”, he said.

It also hints at something about broadband availability in China. Even if the selling proposition were mostly about the status symbol, at least the promise of sufficient content has to exist for China to account for three out of five 4K televisions sold worldwide. It’s not just televisions that upwardly mobile Chinese are buying. They’re buying new homes, too. And when those homes are built, it’s also government policy to connect them with fiber.

Correlation doesn’t prove causation, but it does offer clues for policymakers to ponder.

There’s more network traffic at 4K levels, but can growth be sustained?

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Home field advantage.

The prospects for widespread adoption of 4K television technology and programming – often referred to as ultra high definition – are slowly getting better in the U.S. According to Akamai, which just released its State of the Internet report for the second quarter of 2015, about a fifth – 21% – of U.S.-based users on its network are running at 15 Mbps or better, which ranks 18th best in the world. That’s the minimum service level needed to stream 4K programming.

California does better than that with 26% of Internet connections on the Akamai content delivery network measuring 15 Mbps or faster, which would put us at 14th internationally, with about the same adoption rate as Finland and the Czech Republic. As with Internet speeds, South Korea, Hong Kong and Japan rank first, second and third respectively.

South Korea is particularly strong when it comes to 4K capable homes, more than half – 53% – clear the 15 Mbps benchmark. That gives South Korean manufacturers in general and Samsung in particular a big competitive advantage. The ability to field test new products in the home market, where high speed broadband adoption is robust enough to support significant content production as well, will boost development of the technology.

The U.S. and Californian figures are encouraging, but might also be misleading as well. The more people that buy service packages at or above the 15 Mbps level, and the more they start streaming high bandwidth 4K programming, the more clogged local and long haul infrastructure will become. It’s one thing for a relatively small fraction of users to occasionally hit high speeds. If that becomes the norm for streaming traffic, though, core infrastructure, from the neighborhood level on up through connections at Tier 1 Internet exchanges will have to be upgraded to handle the volume and avoid complete logjams.