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A Quarter of Broadband Homes to Be Mobile-Only by 2013
Posted: 14-Oct-2008 [Source: Analysys Mason]

[Analysys Mason's new report warns fixed operators of the need to come up with new strategies for dealing with expanding mobile broadband and forecasts that by 2013 a quarter of European broadband sites will be mobile only.]

London -- -Fixed operators need to come up with strategies for dealing with a rapid and invasive expansion of mobile broadband into their core growth area, consumer broadband, according to a new report, Mobile broadband: another substitution threat for fixed operators?, published by Analysys Mason, the premier advisers on telecoms, IT and digital media.

ADVERTISEMENT The report forecasts that by 2013, 47% of European broadband subscriptions will use mobile networks and nearly a quarter of broadband-equipped sites will use mobile-only. The speed of take-up of broadband via mobile USB modems has surprised many in the fixed broadband business – and, indeed, the mobile business – and the early indications are that consumers in Europe are using mobile broadband as a substitute for fixed. DSL subscriber net additions are drying up, and headline prices for mobile broadband are frequently lower than those for DSL.

Nearly half of fixed broadband users currently have a usage profile that is no higher than the average usage on mobile broadband, making the size of the addressable market for mobile broadband as a substitutive consumer proposition enormous.

Mobile broadband is an opportunity that MNOs cannot afford to miss, but they face some difficulties in keeping the momentum going. While increasing the capacity of networks is essential to avoid reductions in service quality, MNOs need to dissociate rises in network costs from the exponential increases in bandwidth demands that have already been seen. This will involve access network upgrades, but also, crucially, the transformation of legacy backhaul to an aggregated IP infrastructure.

“In the shorter term, MNOs need to manage customer traffic volumes at a retail level, selling to the kind of customers who will not put excessive pressure on the networks,” says Matt Hatton, Principal Analyst specialising in mobile broadband at Analysys Mason. “In this respect, MNOs can pull many levers, including volume-based caps, pay-as-you-go charging and fixed–mobile bundles.”

“Fixed operators are currently underestimating the scale of the threat of mobile broadband”, says the report’s main author Rupert Wood, who argues that a repeat of fixed–mobile voice substitution will play out.

“Fixed operators, forced to invest heavily to differentiate their version of broadband from mobile, will pack more speed and features into their DSL services, but could end up with a product that, although it is better value for money, ultimately loses out to mobile because it is less flexible and involves substantially higher monthly costs for the end user.”

However, there are significant new opportunities for fixed operators.

“Instead of concentrating on expensive retail differentiation,” Wood says, “fixed operators should focus more on the rapidly expanding wholesale opportunities to provide the new backhaul and platform infrastructure that mobile broadband providers urgently need. Fixed and mobile operators will need to learn to co-habit as well as to compete.”

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