The Mobile Broadband Explosion: Mobile Broadband finally reaches the Tipping Point

A mobile broadband Tipping Point has been reached: HSPA (High Speed Packet Access) is ‘good enough’ for customers and prices have fallen by a factor of 16 in less than two years.  Three UK (H3G UK) now offers mobile broadband prepay, 10 GBP ($20) buys up to either 1GB or 1 month of access, and its prepay so for regular travelers are no longer subjected to the extortionate 15 GBP ($30) per night internet access charges at UK hotels.  Specifically on the ‘factor of 16′ data point using Three UK as an example, in ’06 the price per MB was 8p/MB, it is now 0.5p/MB (contract package 15 GBP per month for 3GB).  Mobile broadband is growing faster than any previous service, including voice.  Operators are talking about annual subscriber growth rates of over 400%, in one case 100% per month!  It reminds me of the good old ‘mobile-gold-rush’ days in the ’90s, and aren’t we supposed to be in a recession?  Mobile Broadband is generally a USB HSPA modem connected to a laptop.

However, the problem is this has happened at the same time as two other trends:

  • The internet has gone ‘video,’ so data traffic is growing exponentially on these broadband ISPs; and
  • Computing has gone personal; laptop penetration in some countries is close to 40%.  As data points: the Asus Eee laptop costs between $300-$400, and there will be roughly 40 million laptops sold this year in both the US and Western Europe.

In the UK, the BBC iPlayer is causing fixed broadband ISPs (Internet Service Provider) to complain, customers are now regularly consuming multiple GB per month through their ISP, most of it watching video.  Also new internet-connected HD (High Definition) devices such as the Sony PS3 provide access to games demos and video trailers (all available for free to the customer) where one demo often requires >1GB of data.  The fixed broadband ISPs are now revisiting their network economics.

For Mobile Operators they the advantage at the moment that customers do not yet expect ‘unlimited’ mobile broadband access, so the 1, 3 and 7GB limits are not yet a significant deterrent.  However, even with such limits and customers now more readily filling those limits, hence mobile operators must change their network economics from 1c per MB to 0.1 c per MB.  Note, a typical smart phone uses about only 10MB of data per month on average, so laptop access has the potential to increase usage per device by a factor of 100!   The average mobile data bit rate per subscriber was about 10 kbit/s per session, a fixed broadband ISP’s average was 25 kbit/s (’07).  Fixed broadand ISPs are estimating their average rate will grow to 70 kbit/s by (2010 or 2011).  The driver as mentioned before is video consumption over HTTP, iPlayer (P2P video), P2P (Peer to Peer protocol) sharing, Sony PS3 downloads, etc.

This tipping point creates a number of opportunities.

On the services side:

  • The Mobile web is not just about smart-phones; it’s about mobile laptops.  The web is not just about desktop PC access, it’s about mobile laptop access.  The use cases are different, hence the opportunities.
  • With Bluetooth coming as standard in most laptops sold in Western Europe the opportunities for VoIP bypass are significant.  But it will be interesting to see what substitution really takes place.  It can not replace my mobile phone, but it could help save me a few dollars for expensive international calls when I’m settled at a coffee shop.
  • Those places where people sit and wait: train stations and trains, coffee shops, airports, in the back of the car, etc. will be far more likely to have sophisticated internet devices connected.  Presenting opportunities in customer service, customer retention, marketing, ways of selling and doing business.
  • For enterprises this also changes the mobile office, enabling greater transparency and security of enterprise applications.
  • And as discussed at length in other articles on this weblog, provides new opportunities for the Telco API to enhance the web experience of those mobile laptops.

On the network side:

  • The core network of mobile operators is going to need to flatten, and do so quite rapidly.
  • The backhaul network in mobile operators is already a well covered topic, announcements between O2 and BT show the solutions being adopted.
  • HSPA+ is required not for speed, but for the capacity it offers to meet demand in high traffic zones.  HSPA+ was discussed in my Mobile World Congress Summary.
  • The usual device delays that 3G and HSPA has suffered, may not impact LTE (Long Term Evolution) as greatly as its first application may not be a smart-phone, rather a USB mobile broadband modem powered from the laptop.