Online TV drives a step change in Internet needs

New Zealand’s online TV market has ramped up in 2015, shining the light on a fundamental shift in New Zealand’s broadband needs. The short video below highlights the step change in internet traffic that online TV has driven over Chorus’ network.

Video has always been talked about as the “killer app” that will drive a need for better broadband in the home but as it evolves it is driving significant change through the whole telecommunications industry.

  • Spark noted that monthly household data use jumped 29 per cent between Feb 2015 and April 2015, and peak bandwidth from Spark’s Lightbox service increased 400 per cent since January 2015.
  • Slingshot said Netflix traffic accounted for about 25 per cent of all network usage.
  • Vodafone said video streaming now made up 60 per cent of its home broadband traffic.
  • 2degrees says they have noticed a significant increase in data usage across both its fixed and mobile networks as consumers continue to adopt more streaming services and find new ways to use their devices.

As major players in the industry see significant growth in traffic, the real challenge lies in anticipating what the new world may look like. Many people may think of the internet as a vast, virtual space, but it actually has a very real, very physical aspect to it in the form of servers, switches, routers, and cables that all need to be maintained and upgraded to support significant changes in usage.

Fibre optic cables help to future proof one aspect of the network, but all players in the industry still have decisions to make about other equipment in their network, which will ultimately impact an end-user’s experience. Underestimating growth will run the risk of congestion, a drop in performance and potential loss of customers. Over estimation risks surplus investment in a competitive market with tight margins.

Current adoption levels of online TV would indicate that further growth is more likely. AC Nielsen indicate that 72 per cent of households only watch TV on a traditional TV set, but over 50 per cent have a personal video recorder (PVR). Both Sky and Freeview plan to upgrade set-top-boxes to enable online content, so there is potential for considerable growth in this space.

For players in the industry, this presents an opportunity to differentiate, up-sell, or decrease churn by making sure end-users have a connection that will provide a good first-time experience.

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