Questions & Answers

Mobile broadband operators in markets with developed fixed broadband infrastructure should prepare for a decline in market growth, according to a recent study from Analysys Mason’s.

The study indicates that interest in mobile broadband among non-subscribers declined slightly in all markets between 2009 and 2010, and subscriptions to mobile broadband are unlikely to grow at the same high level during the next year as they did in previous years.

Attempts to sell mobile broadband as a substitute for fixed are likely to fail, the report states, as there is a strong perception among consumers that mobile broadband is not as fast, more unreliable and more pricey than fixed broadband.

So, what should the mobile industry be doing to counter this trend, or to work around it? If mobile operators can’t use mobile broadband to replace fixed broadband, what should they do instead?

Shaun Bodsworth, Inform Telecom managing director: My thoughts are based on personal experience and more importantly, my work as a consultant with large corporate organisations. Therefore, this may have a different context to consumer experiences.

Shaun Bodsworth, Inform Telecom managing director:

I think some of the issue here is that mobile broadband has been overplayed and therefore the expectation level has been set to high.

The key is in the title, ‘mobile’, and that’s what people tend to forget. It’s fair to say that mobile operators have tried to pass mobile broadband off as a substitute for landline broadband and in some cases rapid growth has come on the back of hype, or clever marketing if you prefer. Whichever the case, a large proportion of users have been disappointed with the whole experience.

This is in the main down to coverage and speed, but also down to complexity of set up and availability of technical support, whether that be inhouse or at network level. Be honest, how many people are going to sit on the train or in an airport lounge on hold or talking to a support advisor whilst trying to connect?

Encouraged by expectation levels set, many large businesses have tried to use mobile broadband as a simpler and cheaper alternative for home based workers, thereby negating the requirement to supply a fixed line and broadband. The supply of mobile broadband is quicker, simpler and cheaper. The ‘mobile’ element is somewhat of a bonus in many cases.

With business organisations, in many cases the user experience is poor, but rather than act on this, they simply revert to their domestic or personal broadband and the mobile dongle goes in the laptop bag, reserved for ‘true mobile’ use, or even ‘emergency use’. And there it sits, for a very long time in many cases.

Our experience and research shows that around 40% of mobile broadband connections are not in use. Even when the user has a real requirement for mobile broadband, because their experience is so infrequent, they struggle to know how to connect, or the coverage or speed is so poor they get frustrated with it and it goes back in the bag, possibly forever! One of the other issues that should be considered is the take up of smartphones. For users out of the office, it is far simpler to deal with things on a smartphone, or at least to communicate with customers, suppliers and colleagues via a smartphone. That makes the whole hassle factor (perceived or not) even less attractive. How often do you hear the phrase, “I’ve had a quick look at it on my BlackBerry/iPhone and it looks ok, but I’ll check it again when I’m back in the office”?

In fairness, if you are a regular user, in a good 3G coverage area, your whole experience will be much more positive. However for the very occasional user who only gets GPRS, the whole thing is a bit of a pain, and therefore if they can’t do it on a smartphone or by voice it will probably wait until they are back in the office.

Another consideration is tariffs and charges. Operators have focused on large bundles or ‘all you can eat’ tariffs with fair use policies, and these are simply not used for the vast majority of users. I have recently completed a report for a large client who has in excess of 1,000 mobile broadband devices, all with 3GB usage allowance. Of the 1,000 only three used more than 1GB, and none used more than 2.5GB. More importantly the average usage was a mere 140MB.

Therefore, if the mobile operators wish to continue to keep business users on mobile broadband they must address the tariffs. Whilst some tariffs are now appearing with smaller bundles and cheaper line rentals, the price per MB is way off the mark. I believe that mobile operators need to be at around the £5 to £7 per month, with perhaps 500MB inclusive and price per MB charges around 1p, not £1 as they are currently, perhaps with a maximum bill cap.

This approach may mean a reduction in revenues but this will maintain the volume and users will not be ‘afraid’ of using it and in some cases, usage may actually increase and with it revenues as they become more comfortable. After all, a user on this sort of tariff using 1GB would pay around £15 to £17 per month.

In summary, mobile operators need to be realistic in setting expectations about speed and coverage, including in-building coverage and also with tariffs. The final piece of the jigsaw is the technical support, but this responsibility must be shared by in-house IT teams rather than batting it back to the networks.

Oh, and don’t forget roll out of WiFi networks!

Chris Earle, Unicom operations director: As a fixed line provider who recently moved into the mobile space, Unicom has researched mobile broadband and concluded that, at present, while it is a nice additional extra service to offer it’s certainly not a replacement for a traditional fixed line solution.

Internet usage is no longer just about checking emails, updating Facebook and tweeting about the day’s events. Electronic manufacturers have recognised this and are increasingly creating internet enabled devices, for example TVs and Blu-ray players that can stream media from YouTube or LoveFilm. Users therefore require reliable connections where data consumption isn’t restricted to 1 or 2GB a month.

Mobile broadband adoption is unlikely to grow in its current form as the majority of users have specific locations (including home and the office) where they heavily rely on an internet connection. This connection is often split between multiple devices (such as PCs, laptops, and mobiles) which requires fixed broadband, making mobile broadband an add on extra for those who can afford it. Those requiring a mobile broadband connection are typically those who work on the move (such as respected Mobile Business journalists! – Ed says: Absolutely!), thus making this a niche service and limiting potential consumer interest.

Chris Earle, Unicom operations director:

The mobile industry is unlikely to counter the trend of declining interest with the current offer. Generally, in areas where mobile signals are strong, fixed broadband speeds are much faster and set to increase in the future. In rural areas where broadband speeds are low, or a fixed line solution is unavailable and consumers are crying out for any type of connection, it is likely mobile broadband will be unavailable due to low signal strength.

Mobile operators will not be able to use mobile broadband to replace fixed broadband. However, 2011 will see the introduction of a range of ultra portable tablet devices which benefit from an internet connection. Rather than attempt to replace fixed line broadband with mobile broadband, operators should embrace this new wave of technology which is ideally suited to mobile broadband use.

Take a mobile product which, for most users, can perform the same functions as the aging PC or laptop they are considering upgrading, and combine it with mobile broadband and consumer interest will rapidly increase.

Andy Tow, managing director at Avenir Telecom:: Mobile broadband is no longer a new technology, it’s a tried and tested service which we must remember has had a significant impact on the evolution of mobile working. However, whilst the idea may be ‘old’, the technology behind the service continues to evolve, with focus being placed on the customer experience.

There will always be a stable place for the mobile broadband offering. Taking into account the current economic climate, many businesses are reducing office space and downsizing, therefore encouraging mobile working where the need for mobile broadband exists. In fact many UK businesses were early adopters of the service and have already invested in the roll out of mobile broadband and with many organisations reducing headcount, this has resulted in surplus devices being available.

In addition, with laptop sales now overtaking desktop sales, the ever increasing need for portable internet access is clearly evident and vital in regions where fixed broadband is unavailable. With tariffs now obtainable from all the major networks, offered at a competitive rate and with ample data allowance, any perceptions that mobile broadband is a more pricey solution will surely be eliminated.

Similarly, with plug and play hardware now available, mobile broadband is surely still in its growth stage. Offering no restrictions in the operator platform, combined with high speed devices which switch bandwidth speeds seamlessly, we are also increasingly seeing embedded modules built into laptops by the manufacturers, where developments such as router inclusions for multiple user internet access is becoming the norm.

Andy Tow, managing director at Avenir Telecom

As networks continue to invest in the technology with greater enhancement of speeds and capacity, it will always be a viable option for the mobile worker. Whilst it will never be a long term substitute for fixed broadband, as the networks continue to develop and enhance the service, so will the fixed broadband providers. The network that can offer the latest speeds and the capacity to help bridge the ever increasing gap between mobile and fixed broadband should be the one that is able to attract the greater market share.