mobile broadband watch

11:12:08

Getting to gripsANALYSIS: evoLvINg buSINeSS modeLS

Operators are still formulating their plans for mobile broadband. It’s likely that a number of very different business models will appear on the market

MOBILE BROADBAND has become an industry buzz phrase, but it just wouldn’t be telecoms if the latest trend hadn’t been over-hyped and over-sold to users. Yet as with any technology, if expectations are kept at a realistic level mobile broadband can also be a wonderful thing.

Since the term mobile broadband came to the public consciousness as an alternative way of accessing the Internet, it has been accompanied by hyped-up sales tactics by operators and analyst concerns about the business model. Initial impressive sales of USB dongles, for example, have almost immediately been followed by some significant product return rates, according to O2 UK.

In late October, O2 said research carried out via One Poll indicated that one in 10 mobile broadband users in the UK felt they had been “mis-sold” a mobile broad-band service. In other words, they had been led to believe that mobile broadband would be almost as good, if not as good, as a fixed broadband service, and would provide them with super-fast Internet access whenever they wanted, at a price of around £15 a month. The survey indicated that users were unhappy both with cov-erage and with the ongoing costs, which were higher than they had expected.

The improvements brought by HSPA notwithstanding, the reality is, of course, that mobile broadband is currently not in a position to replace fixed broadband services, and costs are still massively affected if you cross national boundaries. What the service can do is provide a complementary alternative to both fixed and WiFi access services for those users that want to be able to access the Internet at any time and in any place.

O2, which has been the most cautious operator in the UK market when it comes to mobile broadband services and was the last to launch an offering, has now re-vamped its packages and hopes this will lead to “greater openness” for consum-ers. In December it also launched what it claims to be the cheapest prepay mobile broadband offer in the UK, with the launch of a USB dongle priced at £29.99.

This follows 3 UK’s attempts over the summer to display more openness on mo-bile broadband speeds: It may say 3.6 Mbps service on the tin, but in the real world speeds can be less than half that level, the operator pointed out.

Mobile operators are still getting to grips with the business model. Derek McManus, chief technology office for O2 UK, says the company is under no illusion that selling access for a fixed price of around £15 a month is a good long-term strategy to boost profit margins. He says O2 is looking at ways it can add value to the service:

Qualcomm drops UMBtechnology wars

The lack of traction behind the CDMA technology forces the San Diego giant to change course and focus on LTE. PAge 2

MBB prices falltariffs and bundles

New report from Tariff Consultancy says mobile broadband user allow-ances have doubled while prices have come down. PAge 3

Ericsson wins dealnetwork management

Swedish vendor wins deal from MBNL, the UK 3G network-sharing venture set up by T-Mobile and 3 earlier in 2008. PAge 3

Penetration at 6.9%eu data

New figures from the European Commission say mobile broadband penetration across the EU ranges from 1% to 20%. PAge 3

YouGov tracks MBBsurvey results

UK online pollster YouGov is now tracking mobile broadband services every quarter, testing issues such as customer satisfaction. PAge 3

NeWS IN brIef

SPoNSored bY uSer forecAStSmore will be revealed in coming months, but McManus hinted that this could in-volve community-based services.

How mobile operators globally should approach mobile broadband services has been occupying analysts for the past several months and more. Strand Consult, for example, has picked five potential scenarios it thinks could be adopted by operators, ranging from the “dumb pipe” through to “intelligent providers” that offer complex, converged services on top:

• The sale of basic mobile

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Internet: Increasing bandwidth, decreasing prices and fewer services;• Mobile Internet and services pro-viders: Increasing bandwidth, decreas-ing prices and a number of operators launch their own services;• Quality mobile Internet and services providers: Increasing bandwidth, guar-anteed QoS, stagnating prices and a wide selection of own services;• The semi-intelligent mobile Internet provider: Increasing bandwidth and a number of third-party services;• The intelligent mobile Internet provider: “Connectivity”, QoS, own services, many third-party services and the possibility of integration to other products (fixed-line telephony, fixed-line Internet, mobile products and hotspots).

Strand Consult notes that it will be up

Qualcomm drops UMBThe lack of traction behind the technology planned as the evolution for CDMA operators forces the San Diego giant to change course

IT CAME AS little surprise to most in-dustry watchers, but Qualcomm has finally confirmed that it will stop invest-ing in ultra-mobile broadband (UMB) technology.

You could almost describe the de-velopment as the beginning of the end of the holy war between GSM and CDMA technology: UMB, which comes from the CDMA camp, was being posi-tioned as the competitor to Long Term Evolution (LTE), which is the technol-ogy being adopted by the GSM camp. But as CDMA operators moved towards LTE for their future mobile broadband rollouts, the future of UMB looked in-creasingly shaky. Qualcomm’s decision appears to be the final nail in the coffin.

“Verizon Wireless was the starting point; since then, many other CDMA operators have joined the LTE band-wagon—China Telecom, Bell and Telus in Canada,” said Ovum principal analyst Julien Grivolas in a research note. “Even the marketing organisation for CDMA, the CDMA Development Group, re-cently recognised that market traction was behind LTE and mobile WiMAX, not UMB. So the ‘death’ of UMB is not a surprise in itself,” Grivolas added.

Now, instead of three mobile broad-band technologies competing for a slice of the pie, LTE and mobile WiMAX look set to battle it out between them.

As for Qualcomm, this is not the first time it has been forced to stop develop-ing a technology by market develop-ments: it has already dropped EV-DV, which was meant to be an evolution of cdma2000 EV-DO.

But Grivolas noted that Qualcomm will not be out of the “beyond 3G” game. The company already has a lead-ing position in the supply of WCDMA/HSPA chipsets and plans to accelerate its development of LTE chipsets.

There is also, of course, a lot of play left in existing CDMA networks. n

to the different operators to choose which path they want to go down, and adds that local market conditions can also influence how an individual market will develop in the short- to long-term. Some may choose to become a provider of simple, low-price services, the company adds, but others, and O2 certainly seems to be in this camp, “believe that only trying to be a simple discount provider would be catastrophic in the long run when they look at the size of the investments they have already made—and are facing in the future—and therefore choose a more intelligent strategy with more services on top of the initial mobile broadband connection”.

Strand Consult says it thinks operators will mostly opt for the third and fourth solutions: offering connectivity along with a wide selection of their own services and third-party services in some cases: “We are convinced that...these two strategies are relatively easy to implement and both are a natural extension of the current VAS market strategies that many mobile operators already have, where third-party con-tent providers are a natural part of the services that customers are being offered,” the company says.

While these could be the future broad-brush strategies adopted by operators, there are also early indications of some other “niche” approaches to mobile broad-band, as highlighted by Current Analysis in a research note. Principal analyst Emma Mohr-McClune has long stressed the advantages of secondary brands that enable operators to target niche markets with very different services, such as discount and low-cost offers. KPN, for example, has adopted this multi-branding approach with some gusto and markets mobile services through at least 17 fully owned secondary brands across its markets in Germany, the Netherlands and Benelux.

Now, as consumers become more price sensitive in a slowing economy, Mohr-McClune says “several European operators have started to use their secondary brand units to position 3G and HSDPA services to a distinct market niche, with a strong emphasis on youth-centric, prepaid and discount market segments.” Such approaches from operators include mobile broadband services. For example, Orange Austria/One has been offering “diskont-surfen” under its Yesss! brand since September 2007, a 1-Mbps prepaid, SIM-only “starter set” service in conjunction with either a Huawei USB modem or 3G-enabled handset.

Mohr-McClune says this service now has 550,000 customers, of whom around 50,000 are mobile broadband customers. The M6 brand from Orange France also tar-gets the youth market with prepaid handset and laptop data services, while Telefonica O2 Germany offers a discount mobile broadband product under the Fonic brand. n Anne Morris

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hSPA devIceS AS of 31 octobern over 1,500 wcdma user devices launched by 140+ suppliers n 963 hsdPa devices launched by 139 suppliers market segments: n 419 mobile phones and umPcs n 128 Pc datacards (Pc cards/embedded modules/ chipsets) n 208 notebooks n 107 usb modems n 92 wireless routers n 8 Personal media Players, and n 1 camera with hsdPa excluding notebooks: n 253 hsdPa devices support tri-band 850/1900/2100 for global roaming n 559 hsdPa devices support 3.6 mbps peak or higher n 264 hsdPa devices support 7.2 mbps peak or higher n 163 hsPa devices incorporate gPs/navigation capabilities n 223 hsPa devices incorporate 802.11 wifi n 125 hsuPa devices launched Source: GSA

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Mobile broadband pricing a threat to fixed - reportNew report says mobile broadband user allowances have doubled while prices have come down

Ericsson wins dealSwedish vendor wins deal from MBNL, the UK 3G network-sharing venture set up by T-Mobile and 3 earlier in 2008

EU average MBB penetration at 6.9%New EC report says penetration rates across the EU range from 1% to 20%

YouGov to track UK mobile broadbandOrange ranked number one on customer experience in latest poll

MOBILE BROADBAND pricing is be-coming a threat to established fixed-line broadband as the number of flat-rate packages continues to grow and prices fall, according to a new report published early in December.

The report, Mobile Broadband Pricing 2009 by Tariff Consultancy, analysed current mobile broadband pricing in 33

countries across Eastern and Western Europe, and found that mobile broad-band flat-rate bundles are now the norm across Europe. The average flat-rate package bundle has doubled to almost 4 gigabytes a month, while the most com-mon monthly user allowance is now 5 GB and 10 GB, followed closely by 1 GB and 500 megabytes.

But although average user allowances have almost doubled, pricing has fallen by an average of 4% across all countries compared with the previous year.

At least 20 operators across the coun-tries now offer an “unlimited” user allowance for their mobile broadband service, the report said. n

ERICSSON HAS announced a four-year deal with T-Mobile and 3 UK to manage the mobile operators’ shared 3G network. The two mobile provid-ers formed a 50:50 joint venture called Mobile Broadband Network Limited (MBNL) in January, with the aim of combining the two 3G networks and saving £2 billion over the next 10 years.

Under the terms of its agreement with MBNL, Ericsson said it will man-age the operation and performance of both parent companies’ 3G infrastruc-ture, as well as T-Mobile’s 2G radio ac-cess network while the two networks are consolidated. Around 80 T-Mobile em-ployees will be transferred to Ericsson to help it manage the network.

By the time the shared network is completed, 3 and T-Mobile will have a 3G network with a combined 13,000 base stations, which the operators said will provide HSDPA coverage to 98% of the population, as well as improve in-door signal strength. n

THERE WERE 34,040,166 mobile broadband active subscribers in the European Union as of 1 July 2008, ac-cording to a broadband data report from the European Commission, published on 28 November 2008.

This figure does not include France, the Netherlands and the UK. At national level the mobile penetration rate per 100 population ranged from less than 1% to nearly 20%. The average EU penetration

level is at 6.9%. The number of mobile broadband connections using only dedi-cated data cards/modems/keys is signifi-cantly lower (around 2 to 3%).

The EC said it defines active mobile broadband users as those using broad-band dedicated data services via data modems/cards/keys and other active 3G equivalent users using mobile terminals in the last 90 days. n

ONLINE POLLSTER YouGov plans to carry out surveys of the UK mobile broadband market on a quarterly basis in order to determine how UK consum-ers view the services.

UK mobile operators and some ISPs have subscribed to the tracker service, which has a survey base of around 2,000 mobile broadband users plus 1,000 con-

sumers that are typically representative of the UK market. The next survey will be carried out in January 2009, with the results to be issued in February.

Two surveys have been carried out so far, the latest in October. Orange issued a release noting that it was ranked top on customer experience. n

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