Mobility forms popular connection

13 Aug 2007

How effective will mobile broadband be in repairing Ireland’s poor broadband performance? And will it shore up declining revenues for operators?

It’s a five-letter acronym – HSDPA – and it means high-speed downlink packet access. For the average person it means little, unless you find existing fixed-line broadband services either unavailable or just too pricey.

At this stage, three operators – Vodafone, O2 and 3 Ireland – are providing HSDPA-based mobile broadband services in the Irish market at speeds that range from 1.4Mbps right up to 3.6Mbps and cover between 75pc and 85pc of the State.

But will HSDPA be the answer to Ireland’s poor showing on the broadband league tables?

For one thing, the various services on offer are currently available at prices from €12.40, €19.99 and €12.78 per month from O2, 3 Ireland and Vodafone respectively. So on a cost basis, this works out cheaper than fixed-line DSL broadband as there’s no monthly rental involved.

Research unveiled this week from Vodafone indicated that while DSL is now the most frequently used internet connection technology, take-up and availability are underlined by the fact that 16pc of SMEs still rely on dial-up and 22pc rely on ISDN.

However, this revealed a growing preference amongst SMEs not to rely on fixed-line services at all. “With 7pc of larger SMEs now depending completely on mobile services for their communications needs it is evident that landlines are becoming irrelevant for many companies,” said Eavann Murphy, head of business marketing at Vodafone.

Murphy went on to say that Vodafone’s research indicates that 24pc of households in Ireland don’t use a landline. “For the market that doesn’t want a landline, mobility is a huge opportunity. Around 80pc of Irish businesses have mobile workforces today and this suits their needs much more than DSL,” Murphy added.

She said that by the end of August, Vodafone’s broadband service will increase from 1.4Mbps to 3.6Mbps and will reach 7.2Mbps by February.

Vodafone’s next nearest competitor O2 Ireland four weeks ago unveiled its mobile broadband offering which has speeds of 3.6Mbps. The company’s head of broadband Eamonn O’Flynn said that while it is too early to say how many subscribers have signed up, the company has exceeded its own targets.

“This is certainly the biggest product we’ve ever launched. We view it as ideal for providing broadband in places that Eircom can’t. We regard it not only as an SME product but as a consumer product as well. “Our own research reveals that in the past two years the teleworking population of Ireland has doubled from 25pc to 50pc of people spending at least one day a month working from home. We believe this will increase,” said O’Flynn.

“As with every technology, we must stay ahead of the curve and we will move from 3.6Mbps to 7.2Mbps and eventually 14.4Mbps.”

The newest operator to arrive in both the mobile and broadband markets here is 3 Ireland, which launched its HSDPA service in December. 3’s head of communications Rachel Channing said more than 10,000 people signed up for the company’s mobile broadband service in the first six weeks. The company will be obliged by ComReg to reveal its total customer numbers and figures in September.

“Fixed-line providers in Ireland have been very slow to roll out services and for mobile operators the market is ripe. Strategically and particularly for older cell operators like O2 and Vodafone the move to mobile broadband will give them an opportunity to revive flagging ARPU [average revenue per user] levels.

“The fixed-line operators are worried and are now being challenged because they’ve been complacent and missed an opportunity in the Irish market,” said Channing.

While HSDPA poses a threat to fixed-line mobile operators and provides an opportunity to revive revenues for existing mobile operators, research from Analysys suggests that without some form of fixed-line service HSDPA may not actually be a viable play.

“DSL services can generate nine times the ARPU earned by many mobile operators today from mobile data services,” said Dr Mark Heath, of Analysys.

The Analysys report found that there is a strong case for mobile operators to unbundle fixed broadband with their traditional mobile services. “If 10pc of its customers subscribed to DSL services, a large mobile operator could achieve a 16pc cost saving in the provision of DSL services by investing in its own local loop unbundled network,” added Heath.

Vodafone chief technology officer for Ireland Mats Svar confirmed in recent months that the company is investigating its own DSL offerings, while O2’s O’Flynn said the company is “examining all opportunities”. O’Flynn continued: “DSL is an option and we have our R&D people studying it, but I can’t be specific at this stage. The day we shut the door on any avenue would be a bad day for O2.”

Channing was adamant 3 would never head in the direction of fixed-line services. “The whole point of HSDPA is that consumers can walk into a shop, pick up the box, install it instantly and they have broadband.

“With fixed line, you need a line into a house, charge people installation fees, etc. The mobile industry is known for being fast-moving. We’ve now raised the bar in consumer expectations. If I can plug and play then why can’t I get that from a fixed-line provider as well?” Channing offered.

By John Kennedy