The desire for higher speeds in telecom networks is beginning to see its end

The increase in demand for speed in telecom networks may be about to slow in developed countries, according to the TMT 2024 Outlook report prepared by telecom business consultancy Deloitte. The report's argument is that the demand for speed from major bandwidth-hungry applications and services in Western homes is slowing and will level off in the coming years.

One factor that will drive this trend is the improvement of signal compression systems, for example in broadcast TV services, which have improved a lot in the last twelve years and mean that less transmission speed is required for the perceived quality to remain the same. Deloitte points out that 90% of the transfer speed recommendations (the so-called bit rate, the minimum speed required to work smoothly) for the main services used by telecommunications networks (video, voice, video calls, navigation, gaming, security, etc.) in developed countries did not increase between 2023 and 2024 and that 80% will not increase between 2023 and 2025. In fact, it will likely decrease in many services.

Families with fewer children

Another aspect that may influence this rise in demand in developed countries is the composition of families, which have fewer children. Thus, in 2022, the average size of households in the EU was 2.1 people and only 5% had three or more children, since single-person households or couples without children predominated. A similar trend is occurring in the United States. In 2022, the average household size in the United States will be 2.5 people, a figure that occurs in a third of households. Among the rest, the average size was 1.25 people, with a total of 38 million homes occupied by one person, 29% of the total.

Another factor is that the increasing crackdown on shared accounts – such as Netflix's recent campaign that did well commercially – on streaming TV services will prompt many households to start consuming less content because they have less access to TV platforms.

You need 100Mbps per home

In this sense, the report notes that for a typical two-person household, total usage during peak hours will likely be less than 100 megabits per second (Mbps), as about 5 Mbps will be allocated to each streaming TV connection. Which will be added 1 Mbps for music service, 5 to 10 Mbps for online video games and 4 Mbps for video calls. Deloitte points out that the proliferation of 4K TVs and virtual and augmented reality headsets could drive speed needs in the home, but neither phenomenon will spread widely — due to their high cost — in the short term to make a difference enough.

News in marketing

This slowdown in the need for faster communications could mean, according to Deloitte, a series of important changes in the industry. The slowdown will mean that operators in developed countries will focus more on their marketing campaigns, refocusing them from speed to other attributes such as the reliability and quality of their communications, and greater importance will be given to audiovisual content as well as to aspects such as coverage in different rooms within the home or price, with the aim of expanding the customer base. By reaching layers of the population that were hitherto not connected to the Internet.

Moreover, this development may provide a boost to alternative networks to Western standards, which are mostly delivered via fiber or cable networks. In this sense, a slowdown in the demand for more speed would allow for greater success of fixed networks based on mobile technology, especially 5G, such as fixed wireless access (FWA). These networks, which have not developed as much in countries with as much and cheap fiber as Spain, are very successful in the United States. Half of the broadband additions in 2023 in the US were FWA networks over 5G and the fifth network in North America with the average speed in 2022 was an FWA network with an average throughput of 24 Mbps.