Onlive has recently caught my eye. They provide cloud based gaming, and I think tell us something very interesting about broadband requirements for cloud based services in general.
All the processing for Onlive is done on their servers in the cloud - the pictures are streamed down to your PC or tablet in real time. Your computer is essentially a dumb terminal, displaying the video and sending up mouse clicks (frantic ones, perhaps, if you're desperate to blast the aliens). A technical description is here.
Onlive is a great test case for cloud based services, for a couple of reasons. Firstly, it is a demanding application from the perspective of latency. If there is material lag between the buttons you're pressing and what is happening on screen, action games (such as the first-person-shooters and racing games) will simply not work. This is the reason serious online gamers obsess about ping, even for games where the processing happens locally.
Secondly, the video needs to be high quality and bandwidth intense. When you're using a word processor, not much changes on the screen at any one time. Even if the entire screen was being streamed from a remote server, compression could keep the bandwidth requirement relatively low. It's a very different case for action games, where the whole screen can change rapidly, as the player turns around or an explosion erupts.
In other words, given Onlive's need for low latency and rich video, if your internet connection can handle Onlive, its going to be able to handle the great majority of cloud services.
So what does Onlive require? "5 Mbps for TVs 40 inches and larger" - and no mention of any minimum upstream requirement. This compares to an H1 2011 average broadband speed of 7.5 Mbps in the UK for example (a figure which excludes the relatively small number of superfast connections in that country). In other words, even with someone else gaming in the house, you'd still have enough bandwidth to be watching a typical 2 Mbps streamed TV programme from the BBC's iPlayer (standard definition - 3 Mbps for HD).
The moral of the story is that today's infrastructure will already deliver us even quite demanding cloud-based services with bandwidth to spare, for the majority of users. The cloud is exciting, and has huge potential (though some risks), but whatever it is it isn't a ready justification for throwing money at fibre broadband.