Tag Archives: 3G

Mobile Broadband in Sweden – Still Growing

Last year, I wrote about the explosive growth of mobile broadband in Sweden. According to the  National Post and Telecom Agency (PTS), which publishes an annual report on the state of the Swedish Telecommunications Market, the number of mobile subscriptions via data plug-in cards or USB modems increased from 92,000 to 376,000 (a growth rate of around 309%) during 2007. The rate of growth in mobile data traffic was even steeper –  total mobile data traffic increased by over 1000% during 2007  (from 203 TB to 2,191 TB).

Well, the PTS has come out with the 2008 report on the Swedish Telecommunications Market highlighting the state of the mobile broadband in Sweden last year. The number of active customers with broadband in Sweden  increased from around 3.156 million to 3.782 million between 2007 and 2008, corresponding to a growth of approximately 20 per cent. Mobile broadband represented 80 per cent of this increase, proving once again that people with dial-up connections are choosing mobile broadband over fixed broadband.

Naturally, mobile broadband traffic continues to grow as the accompanying picture shows – traffic grew from 2191TB to roughly 9TB (a growth rate of over 310%). Sweden_traffic growth_2008

Source: Swedish Post and Telecom Agency (PTS)

But this growth is clearly not generating adequate incremental revenue to the operators – revenue per GB has decreased from SEK 3000 to roughly SEK 200 (SEK 1 = US$0.14), which amounts to US$28 per GB. In an earlier entry, I commented on the profitability of mobile broadband service – I used Informa’s cost estimate of 2-3 Eurocents per MB, or ~20 Euros per GB which translates into ~US$29.5. Clearly, mobile broadband in Sweden is not a profitable service yet. Sweden_revenue_decreaseSource: Swedish Post and Telecom Agency (PTS)

As the accompanying chart demonstrates, most of this traffic is being carried by 3’s network. The average monthly data  per subscription  has increased to 1.8 GB and there was a great variation between the various operators. In particular, 3 is carrying the bulk of this traffic with its average monthly data traffic per subscription as high as 4.5 GB.

Sweden_traffic_increase_operatorsSource: Swedish Post and Telecom Agency (PTS)

Btw, 3 Sweden is the only operator that I have come across that offers different price levels based on the speed of the modem. Three different price levels corresponding to maximum download speeds of 2Mbps, 6Mbps and 10Mbps are being offered – presumably, the choice of modem restricts the maximum download speed. It is an interesting twist to mobile broadband pricing where the predominant model is based on monthly usage quotas and throttling of user traffic once the quota is exceeded.

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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.

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3G for Consumer Gadgets?

The Journal had an article today titled, “Sprint Looks to Power Gadgets Beyond Cellphones” where it is reported that Sprint is talking to companies such as GPS device maker Garmin Ltd., Eastman Kodak Co. and SanDisk Corp. about delivering 3G/EV-DO service for their products. This won’t be the first time – if you have not been living in another planet, you probably know that Amazon is leasing Sprint’s 3G network as an MVNO to provide connectivity to its popular ebook, the Kindle. 

There are some interesting statistics in the article: 

Wholesale currently makes up about 3% of Sprint’s revenue and 16% of its total subscriber base of 49.3 million. While Sprint’s overall subscribers have declined nearly four million since 2006, its number of wholesale subscribers has risen 27% to 8.1 million in the same period.

I am assuming the subscriber count includes voice subscribers as well. Virgin Mobile (Sprint’s biggest MVNO) has roughly 5.8 million subscribers. The numbers seem to indicate that a Sprint retail subscriber has an ARPU that is ~13 times that of a Sprint wholesale subscriber – somewhat consistent with the fact that it apparently it takes about 11 — yes, eleven — Virgin customers to equal the revenue generated from just one Sprint customer.But according to the article, while wireless wholesaling generates lower revenue than retail sales, carriers can hold down costs and maintain good profit margins. But all these numbers may be valid only for voice subscribers – data wholesaling charges may not be that bad. 

Looks like the first salvo is Sprint’s press release yesterday touting its agreement with the Ford Motor Company. From the press release:

Beginning this spring, 2009 Ford F-Series and E-Series vehicles – and later in 2009, Transit Connect vehicles – will offer an in-dashboard PC with internet connectivity via the Sprint Nationwide Mobile Broadband Network. This capability provides the opportunity to leverage productivity application solutions via the Sprint Mobile Broadband Network, including real-time labor and material-cost capture, inventory updates, invoice generation and work-order edits and completion.

The interesting aspect of these arrangements is that the application is not web browsing – instead, it is book and newspaper downloads in the case of Kindle and vertical workflow applications in the case of Ford. I am sure Amazon is paying Sprint based on the amount of bytes downloaded in addition to a per-subscriber fixed charge. Probably the reason why Amazon makes it difficult to use the Kindle as a browsing device!

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Sony’s New Embedded 3G ‘NetBook’

I guess it was just a matter of time before Sony introduced its ‘netbook’ offering – though it insists that its new Sony Vaio P is not a netbook. Walter Mossberg reviews it on the Journal:

I love the look and feel and boldness of the design, but can’t recommend this sleek machine for most users because it is very slow and has poor battery life. Oh, and it sells for double or triple the price of other small laptops, commonly called netbooks. 

He advises waiting for the version that supports Windows 7. But, man, it does look great!

sony_vaio_p5The interesting part about this ‘netbook’ is that it has embedded 3G capability – with Qualcomm’s Gobi chipset which supports both HSPA as well as EV-DO connecticity. Thus far, only Verizon Wireless is offering a $200 rebate as part of its Mobile Broadband offering – I expect many European 3G carriers to jump on the bandwagon. 

And for folks who really cannot wait to start surfing on their carrier’s HSPA network, read this to get you through. With Nokia making noises in this area, are “netbooks” the new frontier?

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3G Embedded Netbooks – Killer Product?

The relative success of Asus Eee PC has created a new product category – netbooks, also called Mobile Internet Devices (MID) or Ultra-Low Cost PCs (ULPCs). Never to shy away from new product hype, ABI research has promptly come out with a forecast calling for over 200 million of these little fellas by 2013. A quick note – this is the same size as today’s worldwide laptop market! The report probably assumes (like Michael Dell does) that mobile operators will play a significant role in pushing these babies out, bundled along with their 3G data plans – with subsidies to boot. This model is no different from the one where the operator subsidises expensive phones to sell a voice plan. 

 Given that netbooks are all about always-on connectivity, 3G in addition to WiFi is a must for this product category. This leads to the question – does it have to be built-in? I feel that the answer is yes. I am aware of the arguments against embedding 3G functionality in laptops. However, if you recall, PCMCIA cards were the initial enablers for WiFi connectivity – I still have one of those lying around somewhere. But convenience coupled with declines in module costs drove OEMs to deliver laptops with integrated WiFi functionality. The same trend is likely to be repeated with integrated 3G as well. To begin with, USB dongles hanging out of netbooks will look pretty awkward – in addition, embedded antennas down the side of a screen will deliver a better signal that translates into higher speeds. Instant 3G connectivity when the netbook is turned on, similar to WiFi, will also be a key selling point. Finally, mobile operators may end up driving this product category and the OEMs will have little choice other than partnering with the operators.  Recent events seem to bear this out. Vodafone announced that it will start selling Dell’s Inspiron Mini 9 ultra-mobile device with built-in mobile broadband, exclusively through Vodafone stores and online, and directly from Dell, in key European markets. More mobile operators are launching netbooks with integrated 3G modem functionality in partnership with OEMs.  T-Mobile Germany announced that it will be selling the Asus Eee PC 901 Go with integrated mobile broadband. The announcement also states that the 3G connection will be up and running when the netbook is switched on similar to WiFi. Acer, the world’s third largest PC vendor, is reportedly in talks with several 3G (third-mobile operators such as Chunghwa Telecom and Taiwan Mobile in Taiwan, as well as T-Mobile International, Vodafone Group and Orange in Europe to supply netbooks with built-in 3G.

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Can Mobile Operators Sell Laptops?

At the recent Citigroup Technology Conference, Dell’s CEO, Michael Dell indicated that the strategy for selling the company’s ‘netbooks’ would be via the wireless network operators – the former would be subsidized to consumers along with 3G service. Actually, this model is not new – Carphone Warehouse in UK has been giving away free laptops in exchange for a 3G subscription for many months now.

CARPHONE WAREHOUSE - FREE LAPTOP OFFERS

CARPHONE WAREHOUSE - FREE LAPTOP OFFERS

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Deeper Dive into Mobile Broadband Growth in Austria

Austria shows that mobile broadband can be a significant threat to the old DSL-fixed line business. As shown in the Figure, the last three quarters for Mobilkom Austria have witnessed mobile broadband subscriptions exceed DSL subscriptions, thanks to a significant uptake in datacards / USB dongles and internet-enabled smart phones. The main driver for this increased mobile broadband usage is the emergence of new platforms as well as tariff structures that are becoming more attractive than fixed DSL offers. Continue reading

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Can Mobile Broadband Bite into Fixed Broadband?

Nielsen Mobile, a service of The Nielsen Company, reported that there were more than 13 million wireless data card users in the US as of Q2 2008. The interesting piece of information buried in the press release is that as many as 59 percent of the mobile data card users were willing to swap their current ISP for their broadband needs, indicating shaky loyalty and low switching costs for ISPs. This is not too surprising given that a USB dongle/modem/stick solution can address their mobile as well as fixed connectivity requirements.

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HSPA subscriber numbers – Reality Overtakes Hype

The GSMA, the global trade group for the mobile industry, releases a quarterly report on the growth (or lack of growth) of GSM, GPRS/EDGE, W-CDMA and HSPA subscribers, terminals and operators. In the latest report (August 2008), it announced that the number of worldwide subscribers using Mobile Broadband (HSPA) networks has topped the 50 million mark from 11 million one year ago. This indicates that global uptake of HSPA technology among consumers and businesses is accelerating, indicating continued traffic growth for high-speed mobile networks worldwide. Wireless Intelligence expects the number of HSPA connections to be growing by 4 million per month by the end of 2008. The surprise here is that in its report released earlier, the number of HSPA subscribers were estimated to be around 56 million by end of 2008 (See accompanying figure). A rare occasion when reality has definitely overtaken hype! We should not be surprised if the real number is close to 75 million by end-2008 given current subscriber growth rates.

In October 2007, there were roughly 403 HSPA devices (a mixture of mobile phones, dongles, routers and notebooks) launched by 80 suppliers. That number has almost doubled to 742 HSPA-enabled devices available from 117 manufacturers. Furthermore, in February 2008, there were 174 commercial HSPA operators and that number has grown to 191 in the latest survey. The most widely-deployed peak data speeds over HSPA are currently between 3.6Mbps and 7.2Mbps. This translates to an end user speed of more than 1Mbps, comparable to many of today’s fixed line broadband services.

There is a running counter of Mobile Broadband connections around the world on the GSMA’s dedicated website: hspa.gsmworld.com.

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