North America is an exception in the mobile broadband (MBB) market amongst developed nations.  At the end of Q1 2009 there were 17.3 million data-only HSPA subscriptions in Europe, 14% of all broadband connections are now mobile and mobile is growing at 5 times the rate of fixed broadband.  Depending on how you calculate it, the MBB connections in the US are somewhere around 4% of all broadband connections – and the overall broadband penetration in the US is only 60% with the US at number 20 in the broadband league.  At the end of 2008 mobile operator 3UK was the third largest UK ISP (Internet Service Provider) after the incumbent operator (BT) and cable provider (Virgin) with nearly 1M MBB subscriptions; the merger of ISPs Carphone Warehouse and Tiscali knocked 3UK off that spot.

Just comparing MBB contract plans:

• At the low end in the US 250MB costs $40, while in the UK 1GB costs $7.50; and
• At the high end in the US 6MB costs $60, while in the UK 15GB costs $25 – and even netbooks are bundled with the plans in the UK.

The US is between 6 to 20 times more expensive than the UK!

Roughly 95%-97% of MBB traffic is from laptops/netbooks (source EU operator).  Mobile broadband is now a mass market service in many developed markets.  Data-only subscriptions involve either a USB dongle (>90%) or embedded broadband (<10%), data cards are no longer relevant in most markets.  Customers prefer the USB dongle as it can be shared between devices and customers.

The USB modem has created a separation of network and device, minimizing many scaling issues faced by smaller operators.  This enabled small operator 3UK (roughly 4M customers) to disrupted the UK market with its aggressive MBB tariffs, bundled netbooks and prepay mobile broadband.  In the UK, customers now expect a netbook when signing up for a MBB contract – the US gap is not just the 600 to 2000% higher price!  The European netbook market in Q4 ’08 accounted for 20% of laptop sales, in Q1 ’09 this accelerated to 29% – that’s >5M units per quarter principally driven through mobile operators.  Below I show a comparison of MBB plans that include bundled netbooks from Broadband Genie.

The US has a long way to go before it reaches the value being offered in other markets.  The reasons behind this are ineffective regulation (e.g. local loop unbundling regulation in the US in embarassing compared to other countries) and we have essentially a duopoly in fixed and mobile broadband.  Something needs to change.