No bump to bitrates for digital apps in the near term: Is a period of enough fixed broadband connectivity approaching?
In some parts of the world, some consumers may have all the bandwidth they need in 2024. They are still expected to want ever better internet connections, just not necessarily faster ones.
The demand for ever higher internet speeds over fixed networks has been a constant for most of the history of the internet. However, recent shifts in technology and consumer behavior suggest that this trend may be slowing or stopping.1 The rise of online video streaming has, historically, significantly driven bandwidth demand, but even this shift has its limits. Deloitte predicts that in 2024, over 90% of the most used online applications on fixed broadband networks in developed markets will have the same vendor-recommended bitrate as in 2023. The most commonly used applications include streaming video and audio, video calling applications, online games and home security: Most of these applications state recommended minimum bandwidth on their websites. We further predict that at least 80% of these applications may see no increase to officially advised bitrate for the two-year period between 2023 and 2025. Over time, the bitrate for some applications might reduce due to better compression.2
For many households, aggregate peak-hour fixed broadband requirements may increase only moderately in the near-term future. As such, there may be less incentive for subscribers to upgrade proactively to a significantly higher speed package.3 Consumers are likely to be less focused on speed and more on other capabilities, such as reliability, bundles with media content, indoor range, or outright value.
That said, consumer demand for higher speeds is only part of what drives network infrastructure needs for broadband providers. Globally, there are governmental incentive programs and regulatory requirements aimed at eliminating the digital divide with minimum speed requirements. These range from as little as 10 megabits per second (Mbps) to 1 gigabit per second download speeds, so providers should build networks with these speeds to receive funds or comply with mandates.4 Next, there are competitive pressures in the market: If one provider is advertising ultrafast speeds, others may need to match or at least come close. Further, building network infrastructure is often an investment with a 20 year plus horizon, so there is an element of futureproofing. Finally, newer technologies can offer more than just speed; they are likely more reliable, more sustainable, easier to provision, cheaper to operate, and have lower latency. Putting that all together, broadband providers are expected to migrate away from copper digital subscriber line technologies and older cable solutions, toward Data Over Cable Service Interface Specification 4.0 and fiber to the home, even though consumers may not yet “need” those technologies in 2024 and 2025.
When considering bandwidth demand per household, trends in the composition of homes should be noted. In developed markets, household size is generally in long-term decline. In the European Union, as of 2022, average household size was 2.1 people; over three quarters of households had no children. While a home with three or more kids and two parents may have high aggregate bandwidth demands, less than 5% of households have three children or more;5 single or double adult occupancy predominates.6 Indeed, by 2025, single adult households may be the most common type.7 The United States shows similar trends. In 2022, average size for family households (a third of the total) was 2.5.8 Of the remainder, average size was 1.25, with 37.9 million households, that is 29% of the total, being single-person occupied.9
For a household with 2 people, aggregate peak-time usage for the most used applications is likely to be well under 100Mbps in 2024,10 even allowing for overhead. A reliable 100Mbps connection would likely be more than sufficient to deliver two high-definition (HD) video streams to a television. If someone was also listening to streamed music, this would—per the websites for some of the most popular applications—add under 1Mbps per “high quality” stream.11 For online multiplayer PC or console video games, 5Mbps–10Mbps per session is the most likely recommended bitrate.12 Video calls require up to 4Mbps downstream and upstream.13 There may be other applications, such as security cameras, that would use additional capacity, but these devices typically use 1–3Mbps per device.14
A household with four influencers—an atypical example—could require over 300Mbps, if three were uploading 4K video at the same time while downloading other content (figure 1). However, less than 1% of households in most markets would likely have this composition of individuals.15 The more common composition—adults with no children—will very likely have far more modest needs, in 2024 and in the medium term.
Video on demand’s sweet spot is likely to remain 5Mbps
The most ubiquitous data consumptive application in most developed market households in 2024 is likely to be video-on-demand (VOD). In most developed markets, about three quarters of households have access to VOD.16 In many developed markets, consumption of all forms of on-demand video is likely to be multiple hours per day, and in many homes, VOD is likely to drive the majority of household network traffic.17
The most common recommended bitrate for VOD in 2024 will be 5Mbps or lower, which will be for HD viewing.18 Deloitte predicts about a fifth of VOD will be streamed in 4K with the recommended bitrate varying between 15Mbps and 25Mbps.19 Sports streamed in 4K, which if not readily compressed, will have recommended bitrates starting from 30Mbps.20 Video watched on smaller screens, such as smartphones, PCs, or tablets would likely require a lower bitrate at each resolution level.
Over the last 12 years, required bitrates for streaming VOD have tended to decline as compression has improved.21 Over the next five years, further advances in compression are likely.
VOD platforms are unlikely to increase recommended bitrates in 2024. Increasing the bitrate to offer a higher-quality image may only make sense if consumers can perceive this improvement. However, many viewers might remain satisfied with HD streams in 2024, and over the medium term. One illustration of the public’s acceptance of current streamed HD and 4K quality is the contrasting bitrate for optical discs, which were subscription VOD’s predecessor. The bitrate for HD disks is up to 40Mbps and for 4K it’s up to 128Mbps.22 This means that the bitrate delivered from an optical HD disk may be double that of a 4K stream, in other words a Blu-ray HD may deliver higher quality as measured by bitrate than a 4K one.
Deloitte does not expect a marked shift from HD to 4K viewing. There are at least three constraints. One is biological: Many viewers may simply not be able to differentiate and so are unlikely to pay a premium for 4K.23 A second is historical: Some popular library content from the 1990s and early 2000s is only in HD. A further constraint is that most TVs in developed markets are HD. In 2019, HD sales were 52% of all sets sold globally,24 and it may take many years for HD sets to be replaced by 4K.25 In the United States market, it was only in 2021 that most homes (51%) self-reported owning at least one 4K set.26
Average actual VOD bitrates may even decline for some households. VOD platforms are constantly optimizing content encoding. Netflix has reduced the bitrate for 4K to as low as 1.8Mbps for segments of some content.27 Furthermore, some households may downsize from 4K service to HD to trim cost. As from November 2023, 4K content on Disney+ will only be available on a premium tier in some markets.28 Finally, any crackdowns on sharing, which may ramp up in 2024, may result in less streamed content being watched in some homes, reducing bandwidth demand.
This section has focused on streaming to TVs. Arguably streaming to virtual reality or augmented reality glasses could require much higher bitrates, as could holography. But we are not predicting a notable rollout of such capabilities in 2024 or 2025. The active installed base of televisions in 2024 is likely to be in the billions, which is higher than the expected installed base of virtual reality devices (in the low tens of millions) or augmented reality headsets (in the hundreds of thousands), meaning that this is unlikely to require higher broadband speeds.29
Audio: Most applications are under 1Mbps
Streamed music continues to rise in popularity. For 2024’s sixteen-year olds, subscription music services will have been available for the entirety of their lives.30 Deloitte predicts that in 2024, the median streaming speed for music will be about 300 kilobits per second (Kbps) for a service that is marketed as high quality.31
There will be significantly higher fidelity services available with much higher bitrates of up to 10Mbps, for Tidal’s “Master” service.32 But these may represent only a small proportion of subscribers and usage, partly because of the higher prices associated with audiophile streaming, and also because Bluetooth, which is the most common form of connecting wireless headphones, does not support bitrates above 1Mbps.33
Speech services such as podcasts and radio are also likely to be under 0.5Mbps.34 Podcasts are about 100Kbps–150 kbit/s.35
Console and gaming PC video games: Most usage will be under 10Mbps
The most data-consumptive games in 2024 are likely to be those played on consoles and PCs. The most popular applications are likely to require in the region of 5Mbps to 10Mbps for online play, with the game content having been downloaded previously.36 Cloud gaming requires up to 45Mbps but is niche, with under 5% of households likely to use such services at least monthly in 2024.37
Connectivity is required for occasional file downloads, but this can be done in the background or during quiet periods. For online game players, downstream and upstream speeds are just two of many parameters that matter; another critical factor could be the ping rate, which measures network latency.
Usage is expected to be significant but much smaller relative to mobile games, which are mostly played on smartphones. The active installed base of devices capable of supporting the latest generation of PC and console games is in the hundreds of millions; this compares to five billion smartphones.38 At the start of 2022, the latest generation of Sony’s and Microsoft’s console had sold about 50 million units,39 and in July 2023, Sony announced it had sold 40 million units.40 The installed base of gaming PCs is expected to be in the low hundreds of millions in 2024, and annual sales were sized at 45 million in 2022.41 About a third of all consoles and gaming PCs are expected to be used daily in 2024.42 By contrast, more than 90% of smartphones and 80% of smart TVs will likely be used daily.43
In the future, cloud gaming—whereby the game is hosted remotely with video images streamed to any screen—could become popular. Cloud gaming services stream video of the game from a data center to the player’s screen, enabling high quality games to be played without a gaming PC or console. An HD quality game may need between 6Mbps and 25Mbps,44 and a 4K game may need up to 45Mbps.45 The exact bitrate will depend on frame rate (measured in frames per second) and color range.
Video calling’s sweet spot may be under 5Mbps
Another common application in people’s homes is likely to be video calling. About 60% of populations in developed markets are in the workforce, and of these, about half may need to do video calls occasionally or more frequently from home.46
For HD connections, most services require 4Mbps for group video calls and less for one-to-one calls.47 Standard-definition video calls require speed between 1Mbps and 2Mbps. Video calls can take place at any time of the day, but work-related calls are likely to take place during the daytime, and depending on the size and age of the household and the season, calls may not compete with other applications for bandwidth. For those that prefer to have audio only calls, bandwidth demand is trivial at under 0.1Mbps.48
For some types of calls, the uplink speed may be challenging. Broadband connections are typically weighted to the downstream connection, that is, most of the bandwidth is allocated for the downlink.49 For most homes, and for many years, this has often been a rational apportionment, with the uplink rarely being used. However, for video calls, a need for 5Mbps uplink can be problematic for some connections during busy periods in a day.
For a small number of users, applications may be streamed to the user’s device, possibly for security reasons or because they are using a thin client (a simple computer that derives its primary processing power over a network connection from a remote server) or network-based device. For the most used office applications, the maximum bandwidth demand would be about 2Mbps.50
Smart home, under 5Mbps per device
Better connectivity has enabled networked security cameras to become relatively affordable. Economies of scale—and the sheer volume of cameras manufactured for devices every year—have helped the price of security devices to decline. Smart cameras remain relatively niche. Deloitte’s surveys indicate that about one in five homes have at least one device, and footage may be stored locally rather than uploaded.51
Connectivity per HD device is up to 4Mbps upstream,52 but 2Mbps is a common recommended speed.53 For some models, bitrates increase when motion is detected.
The bottom line
In the 2010s, the shift from broadcast video, digital video recorders, and DVDs to online video delivered a multiyear change in aggregate bandwidth demand. Historical growth in bandwidth demand, however, may no longer be a reliable indicator of future demand. The era of enough connectivity may be here.
Shifts tend to be finite. Some can take decades to complete; others may take years. In recent years, adoption of VOD has slowed and in the absence of any new applications or devices that could require significantly more bandwidth, household demand for bandwidth might be reaching its natural ceiling, at about 100Mbps.
A metric that may signal a steady decline in the need for higher broadband speeds is the growth in gigabytes transferred per month (figure 2).
The implications are likely multiple.
First, in some geographies, telcos may benefit from focusing less on outright speed and more on other attributes, including reliability. There are also considerations on the positioning of speed tiers: Offering 200Mbps as an entry level tier may encourage the majority of an operator’s subscribers to opt for the lowest and cheapest tier. Conversely, starting at 50Mbps may nudge subscribers into opting for a mid-range tier.
Second, given the variation in uptime between different technologies, the case for migrating to fiber to the home may remain strong relative to legacy technologies with copper terminations.
Third, if aggregate required bitrates are slowing down, this may also mean that other network technologies including 5G or 4G fixed wireless access (FWA) may be viable. In the US market, as of 2022, the fifth fastest network was an FWA network, with median speeds of 24Mbps.54
The era of rapidly increasing bandwidth demand may be coming to an end in some markets (or at least pausing), as shifts in technology and consumer behavior suggest a near-term plateau. Online video streaming, historically a major driver of bandwidth demand, is becoming less demanding. If consumers no longer need faster speeds, it’s likely a matter of time before this ceases being a meaningful differentiator.