opinion


Mobile broadband will prove no substitute for fixed-line

Hamid Akhavan’s claim at the CeBIT trade show in March, that there will be more subscribers to mobile broadband than to DSL within a few years will no doubt lead to a rash of reports predicting that fixed-to- mobile substitution will spread from voice to broadband.

Whether the T-Mobile CEO’s forecast is right is arguable, but fixed-to-mobile broadband substitution? It’s not going to happen, and smart mobile operators shouldn’t want it to.

There’s no doubt that mobile operators have had, and continue to have, a devastating effect on the fixed-line telecoms business. Fixed-line operators have seen their voice revenues decline as using their mobiles instead of their home phones, or have dropped their landlines altogether.

Akhavan’s claim would seem to suggest that the same fate is in store for broadband, as the first generation of mobile services that appear to match DSL and cable on speed and price emerge.

However, there are many reasons mobile broadband will prove no substitute for fixed-line broadband in any meaningful sense. For a start, the two are not comparable in even the most basic respects.

Take Akhavan’s forecast. How many of the 1.8 billion will be using services that customers would accept as an alternative to fixed-line broadband?

The size of his estimate suggests that he has set generous criteria. Informa Telecoms & Media forecasts only 1.6 billion mobile broadband subscriptions by 2012, and only then when you include 665 million subscriptions to conventional WCDMA-based 3G services. WCDMA offers only 384Kbps per user, a speed few would consider to be “broadband”.

Still, a more modest estimate is likely to be impressive when you consider that Informa forecasts only 517 million fixed-line broadband subscriptions by 2012. But it would be misleading to say that mobile broadband will have “overtaken” fixed-line broadband, except in the crudest measure of raw subscription numbers.

Today, each mobile broadband subscription probably has just one user, while a fixed-line subscription is shared among several members of a household. Thus, mobile broadband penetration (of the population) in 2012 will be only 25 per cent, even if you accept Akhavan’s optimistic forecast, compared with fixed-line broadband penetration (of households) of 26 per cent.

True, there are home routers that can turn 3G into a household technology by redistributing the signal via Wi-Fi, but low demand means they are expensive.

A 3G Wi-Fi router typically costs an operator $300 wholesale, according to some analyst estimates, while fixed-line Wi-Fi routers start in shops at about $60. Tellingly, one of the first operators to offer 3G Wi-Fi routers, Vodafone Germany, does not market them anymore, following its move into the DSL market.

Mobile operators’ networks are also poorly equipped to deal with the volumes of traffic seen on fixed-line broadband connections today.

Typically, mobile traffic is backhauled from base stations using several E1 or T1 lines – known in the fixed-line business as “legacy” leased lines. To cope with even modest increases in data traffic, mobile operators will have to make substantial investments.

Informa’s Mobile Backhaul report predicts that North America’s mobile operators will spend a total of $3.3 billion on backhaul between now and the end of 2012 as mobile broadband boosts annual traffic to more than 800,000TB from about 150,000TB last year.

Even so, mobile data traffic will remain tiny in comparison with total Internet traffic. Cisco estimates that US Internet traffic in 2007 totalled 30 exabytes (EB) – that’s 30,000,000TB – and will rise to 72EB in 2011.

The mobile operators tacitly acknowledge that diverting any more than a fraction of “real” Internet usage onto their networks would be disastrous. Dig deep within the terms and conditions of any affordable “unlimited” mobile broadband offer and you will find monthly download limits of as low as 1GB.

Nevertheless, fixed-to-mobile broadband substitution appears to be happening in at least one market; Telekom Austria partly blamed rival low-priced mobile broadband offers for a recent acceleration in its fixed-line losses. 3 UK has also claimed that some customers have taken its mobile broadband services instead of DSL or cable.

This is likely to be a blip; subscribers will soon realise that mobile broadband can’t do what fixed-line broadband can. Regardless of any improvements in value for money, speed, home networking or backhaul, mobile broadband will always be a few steps behind.

But more important, it fails one simple test. Ask yourself: would you advise any of your friends or family to go mobile-only for all their broadband needs?


Leave a comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Events

There are no upcoming events.

Polls

What is your name?

Loading ... Loading ...