Is Mobile Broadband Profitable?

The consensus opinion is certainly that mobile broadband is not a profitable business (yet)  in Western Europe (especially in countries like UK) where mobile broadband prices are trending lower than fixed broadband prices. I have always wanted to do a quantitative analysis. 

The analyst firm Informa claims that fixed-line costs in Europe are near Eurocent 0.1-0.5 per MB, compared with Eurocent 2-3 for mobile networks. We can use this number to compare the cost basis for various operators’ quota-based mobile broadband packages. For example, 3 UK’s package is as follows:

3_uk_pricing_plans

So if you use the 2 Eurocent per MB number, 1 GB costs ~20 Euros (or 18 pounds) significantly more than the 10 pounds that 3 seems to be charging for the 1 GB package.  Assuming a user who signs up for a 7 GB package uses ~2 GB, the cost for 3 to support that user is ~36 pounds which is still a lot higher than 25 pounds. I am not sure about you, but I sure don’t see how 3 is making money on these mobile broadband packages.

About these ads

2 Comments

Filed under fixed broadband, mobile broadband

2 responses to “Is Mobile Broadband Profitable?

  1. I can tell you that the experience is similar in Australia, where many providers are also giving away the dongle. It has become very cut throat.

  2. I’m not sure that the costs of transfering data via the phone line can be compared directly with mobile broadband as the two systems are so different in terms of the set up.
    It’s also worth bearing in mind that mobile broadband is set to become increasingly popular over the next few years as coverage increases. If, as predicted (http://bit.ly/462DJk) there are 3bn mobile connections by 2014 then the providers wont be needed to make much from each customer to make a profit.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s