The Next Broadband Giveaway

Ubicom predicts that broadband service providers will start giving away free home networking. The strategy is a variation of the old razor blade marketing scheme of giving away the razor to make money selling the blades.

by Michael Singer of siliconvalley.internet.com [June 18, 2001]

In the latest in its series of executive briefing papers, networking software provider Ubicom Friday released its online paper, Free Home Networking—Coming Soon, which discusses the potential for free home networking to be provided by broadband service providers.

That's right—broadband service providers.

Ubicom believes that TV cable, satellite-dish, DSL, and other broadband providers will soon provide or underwrite free home networking for two economic reasons:

First is their desire to lock-in customers ahead of growing competition. Second is the "pull" of current revenues from such applications as sharing of home computer peripherals, entertainment, home security and on-line interactive games.

Such a strategy is a variation of the old razor blade marketing scheme of giving away the razor to make money selling the blades. The broadband providers will provide home networking to obtain on-going service revenues.

"The current situation is unusual because of the existence of in-place 'killer applications' simultaneously creating user demand and vendor revenue," says Ubicom vice president of Marketing Stephan Thaler. "Thus, giving away or underwriting the cost of home networking by the providers makes sense. We see home networks with a broadband access point as the next logical progression in networking."

The short, easy-to-read background document details the scenario and potential revenue that will drive free home networking.

The next logical step would be to get broadband service providers to throw in a free lunch as well.

—End