Fixed broadband providers will need to come up with a way of countering the massive invasion of mobile broadband into their core area of growth.
Telecoms advisor Analysys Mason has forecast that by 2013, some 47pc of European broadband subscriptions will use mobile networks, and nearly a quarter of broadband-equipped sites will use mobile-only.
In a study of 26 European markets, it found the speed of take-up of broadband via mobile USB modems has surprised many in the fixed broadband business.
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.
Analysys Mason said mobile broadband is an opportunity that mobile network operators 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, mobile operators need to manage customer traffic volumes at a retail level, selling to the kinds of customers who will not put excessive pressure on the networks,” said Matt Hatton, principal analyst specialising in mobile broadband at Analysys Mason.
Mobile operators, he said, 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”, said the report’s main author Rupert Wood, who argued 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,” Wood said.
However, there are significant new opportunities for fixed operators. “Instead of concentrating on expensive retail differentiation,” Wood said, “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.”
By John Kennedy
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