Home is where the network is

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Home is where the network is

“During the next few years, home networks will leap off the pages of science magazines and into the households of millions. But who will pay, and how?”

The McKinsey Quarterly, 2001 Number 2

Policy relevance:To anticipate the right policy decisions in the field of broadband, policy makers have to be aware what market developments are heading our way.

Main conclusions:

  • Home-networking is far from dead: in the past three years, the underlying technology has undergone its own quiet revolution and big interests are at stake;
  • The current demand for “simple, nuts-and-bolts applications” may already be strong enough for broadband providers to think not only about including home-networking hardware in their installation packages but also about doing so free of charge;
  • The capabilities of chips have increased dramatically: current moedls can move 10 megabits of data a second through telephone lines or the air and fairly soon top speeds are expected to be enough to deliver several DVD-quality audio and video signals simultaneously;
  • To understand the strength of the economic case for deploying home-networking equipment free of charge to consumers, one only needs to consider services that people pay for today even without home networks but that become much less costly delivered through them;
  • Not every product that creates efficiencies comes to market;
  • For cable providers, the time to provide home-networking free of charge may have arrived already;
  • Apart from cable and DSL providers, only one kind of company has any serious thought of installing home-networking hubs in the home: game console manufacturers;
  • The biggest decision that all cable and DSL providers have to make is whether to deploy home-networking equipment quickly or slowly (depending on industry economics);
  • In three to five years, home-networks will have moved off the pages of science magazines and into millions of homes.

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