Deloitte predicts that average broadband speed obtained in most markets should increase by between 15% and 25%. This average obscures significant differences between households. In many markets the top 10% of homes are likely to enjoy 10x or greater the average speed of those in the bottom 10%.

Broadband is now a blanket term which describes an ever-widening range of different performance levels, from a few megabits per second (Mbit/s) up to a few hundred Mbit/s.

There are three main factors that determine what broadband speed is attainable:

One is location: typically, the further a home from an exchange, the lower the speeds. Rural homes are more scattered, and so typically have slower broadband.

A second issue is technology: there are four main types of broadband technology, each of which offers a different range of speeds: Standard ADSL, FTTC (fibre to the cabinet), FTTP (fibre to the premises) and DOCSIS (data over cable service interface specifications). The variation in speeds by technology may increase in the near-term.

Over time, at a global level, the speed of each of these technologies has increased, with cable and fibre broadband technologies getting faster (for example in the UK, cable broadband speeds increased from an average 11.7 to 43.3 Mbit/s between December 2010 and May 2014). An upgrade to FTTC offers up to 1 Gbit/s speeds over existing copper connections. This works over very short distances – ideally 100 meters or less. In rural areas homes may be over 100 meters from the road and miles from the exchange.

A further issue is affordability. In most markets, broadband pricing varies by technology. For some households, an additional £15 per month for faster broadband may be immaterial. For homes below median income levels this may be unaffordable. In the UK, as of March 2014, only 14% of homes passed had subscribed to either FTTC or FTTP.

Bottom line

When we talk about broadband divides, this often refers to the gulf between the 'haves' and the 'have nots'. This gap is important, but it is also critical to recognise variations between the 'haves'. The gulf between those with access to the fastest broadband speeds and those on basic speeds has widened over recent years.

For regulators, the definition of what broadband is needs to be updated regularly. Speed is a key parameter. Historically this has focused on downstream speed, but in future, as broadband usage evolves, upstream speed will become increasingly important as users upload more content.

Any private or public entity looking to deliver over-the-top services, whether this is video-on-demand (VOD) or online tax submissions should consider what ranges of broadband speeds households are able to get.