Tag Archives: mobile broadband

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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Mobile Broadband Showing Cracks?

According to the latest data from the UK broadband comparison website Broadband Genie, only around one in ten (11 per cent) mobile broadband users are satisfied with the speed of their mobile broadband. The data claims that exaggerated advertising and unrealistic ‘up to’ speed claims have given the public an unrealistic expectation of mobile broadband that the service cannot  live up to. And of course, some operators are better than others as this comparison between Vodafone UK and   3 UK shows. At least from this person’s experience, 3’s mobile broadband service just does not work.

VFversus3

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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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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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Interesting Report on Mobile Broadband Pricing in Europe

Tariff Consultancy has released an interesting new report on Mobile Broadband Pricing – an analysis  of current mobile broadband pricing in 33 countries across Eastern and Western Europe.  There are some interesting, yet not completely surprising, findings from the report:

  • The average flat rate package bundle provided has doubled over the last 12 months to almost 4GB (based on the analysis of 100 mobile operators). The most common monthly user allowance price point on offer across Europe is now 5GB and 10GB, closely followed by 1GB and 500MB allowances. 
  • Pricing in 2008 has fallen by an average of 4% across all countries when compared with the previous year – even though average user allowances have more than doubled.  In some countries,  mobile broadband pricing has fallen even steeper – as much as 53%, 43% and 35% in Latvia, Austria and the UK respectively over the past year.
  •  In Ireland, Germany, Sweden and Spain average mobile broadband prices are now significantly lower than the most popular fixed line DSL broadband service, which is driving customers to the mobile broadband offer. I have pointed out this phenomenon earlier in here and here. Ireland and Sweden have always been mobile broadband leaders. Looks like Spain and Germany are following their lead as well.

The most striking feature has been the continued increase in monthly user allowances which have more than doubled last year while pricing has continued to decline. The implication is that the Euro/MB has fallen by more than half – not a very good sign for the operators. Clearly, the key challenge for the operators is to translate the explosion in user growth into profitability. The report also finds that flexible tariff structures that allow for per day and per week pricing (also called pay-as-you-go plans such as O2’s recent offerings) are now available in the market place.

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iPhone – Platform for the Masses?

Conventional wisdom is that iPhone users are a gadget-loving, tech-savvy and well-off bunch. In fact, results from a quantitative study of US 2G iPhone US users conducted by Rubicon in March 2008 revealed that the former have a median annual household income of $67,000 which is roughly 40% greater than the US median. So when comScore reported that the fastest growth in 3G iPhone sales in the US over the summer months came from households that earn less than the median income, it got my attention. As the attached table shows, ownership of the 3G iPhone rose 48% from June 1 to the end of August among households earning between $25,000 and $50,000 a year, compared to 21% overall. Mobile-browser use grew 4.9% among lower-income consumers, versus 2.7% overall, and their mobile music-listening rose 4.7%, compared to an overall decline of 0.3%. In fact, the income segment that shows the next highest growth (46%) in ownership is the $50,000 to $75,000 income category – a segment that is not too far off from the median income.

What gives? Continue reading

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USB Dongle – Fashion Accessory?

You know USB dongles have become mainstream when operators start selling different color skins to go with them. H3G in Sweden (also called Tre) is positioning their mobile broadband as the “most stylish broadband” in addition to being the fastest!

 

Sign up for 3 mobile broadband for 18 months and receive any skin at no extra cost” according to their offer at 3’s website. What will they think of next?

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3G Routers – Will It Accelerate Fixed Broadband Replacement?

I have been commenting quite regularly in this blog about how mobile broadband (based on USB dongles and modems) is increasingly being used by mobile-only operators (those without fixed assets) to accelerate the replacement of fixed broadband, primarily in Europe. The spectacular growth in mobile broadband subscriptions is being driven by aggressive pricing from mobile operators, along with free laptop bundling offersbuilt-in 3G support for laptops and netbooks isn’t hurting either. One missing element in this puzzle has been a way for multiple members in a household or a small office/home office to share a mobile broadband connection in a simple plug-and-play fashion. Enter the consumer-friendly WiFi-over-3G Router! 3 UK is rolling out the nifty Huawei D100 router –  insert your dongle into the router and share your mobile broadband with WiFi-enabled devices such as PC, Mac or a laptop. The 3 store claimThere’s no need for a landline, because the Wireless Router does all the work” is a clear indication that they are going after fixed broadband. If most people are already making voice calls on their mobile phone, it is a small step for the consumer to wonder if he needs the landline at all! It remains to be seen how many consumers will be happy with a monthly usage plan under 15GB especially with the increased usage in online video. Surprisingly, the mobile broadband plan for the router does not include the 15GB monthly allowance plan (which is an option for the laptop plan) – for some strange reason, only the 5GB allowance is available. One would expect that people who buy into this 3G Router in order to share their mobile broadband would sign up for a plan with a higher monthly data allowance. Clearly, 3 is also looking for this product to create stickiness – 3’s compatibility statement indicates that the router has firmware to ensure that a modem from any other carrier does not work properly.

I am a little surprised that 3 UK is not offering a bundled voice + mobile broadband offering. Both (3) Sweden and (3) Austria have been selling Huawei’s 3WLAN Router E960/E970 for a while now – in addition to 4 Ethernet interfaces and WLAN support, this 3G Router also has a RJ11 interface, ideal for connecting the black phones. It is not clear if voice is transported as VoIP over 3G in this case. Several operators including Vodafone Egypt and Optus (Australia) are offering this product in their mobile broadband portfolio as well.

T-Mobile in UK announced a similar product called “Mobile Broadband Share Dock” earlier in the month, but unfortunately, it is still not available for purchase (unlike 3 UK). The concept is similar – plug in your old T-Mobile USB modem or a new one into the dock and share the mobile broadband amongst as many as three people (3 UK claims their product can support 4 end users). I am betting Vodafone and the other operators in UK will follow suit if this concept catches on.

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Telstra Announces HSPA+ Upgrade

Telstra announced that it is upgrading its HSPA network to HSPA+, which the company says will offer peak downlink speeds of 21Mbps by end of 2008. Looks like Telstra pipped the other operators to the post – Qualcomm had announced multiple HSPA+ trials early this year to be conducted with Hutchison 3G, Telecom Italia, Telefonica and Telstra.  

Telstra has always prided on itself being ahead of other carriers and the device ecosystem – it launched its Next G HSDPA network operating in the 850MHz band in record 10 months in 2006. Use of existing GSM bands, such as 850MHz and 900MHz, enables Telstra to expand broadband coverage much more cost-effectively than they can using higher frequencies. Radio signals travel much further at these frequencies than they do at 2100MHz, the other main band currently used for HSPA mobile broadband services, reducing the number of base stations required to cover any given area. 

Not satisified, in 2007, Telstra upgraded its network to support a peak rate of 14.4Mbps (another first) even though no devices were available that could download at those speeds! And now HSPA+. In fact at this year’s Mobile World Congress,  they even committed to 21Mbps before the end of the year and 42Mbps using HSPA+ in 2009. This is all well and good – but some key topics are never fully addressed in these announcements: end user terminals as well as backhaul and core upgrades.

User terminals: I was looking through Telstra’s website and I could not locate any device/user terminal that supported HSDPA at 14.4Mbps. I am not sure what the point of the upgrade is if there are no terminals that can leverage the network’s capabilities. In fact, Telstra seems to be mainly promoting their walled garden services (such as BigPond Mobile and Mobile FOXTEL) on their Next G network. Even for this HSPA+ press release, it is not clear what end device prototypes were used for the interoperability testing – the only piece of available information is that Qualcomm’s MDM8200 is the chipset in Ericsson’s HSPA+ infrastructure solution. 

Backhaul and core upgrades: The press release has a reference to “planned Ethernet backhaul” – no additional information. There was also a pithy press release in June about Telstra activating 3G Direct Tunnel in its core network. In Direct Tunnel, the bearer traffic flows from RNC directly to the GGSN, bypassing the SGSN. Only the signaling traffic is processed by the SGSN. This requires a software upgrade of all the 3 elements – RNC, SGSN and GGSN and the benefits are not entirely clear since it is still quite aways from the flat IP architecture.

Atleast, Telstra’s shiny network boasting the highest coverage (close to 99%) is allowing it to charge premium prices. Telstra’s 1GB plan for mobile broadband costs almost three times as much as Optus’ comparable plan. According to Forrester Research,  Next G mobile broadband service is one of a few that Telstra will not consider discounting – even for its largest customers. Surprisingly, it does not seem to have affected its HSPA market share. Telstra had 3.525 million HSPA subs at the end of 2Q 2008, representing a market share of ~88 percent. With the other operators increasing their coverage and driving prices down aggressively, this space should be interesting to watch.

Update: Sierra Wireless announced it is working with Australia’s Telstra, Qualcomm and Ericsson to deliver the first 21Mbps HSPA+ devices. Sierra said shipments for customer trials are expected to begin in the coming months with a commercial launch to follow. If enough vendors announce support for HSPA+ in the near term, it could spell trouble for WIMAX.

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Entry of White-Label Mobile Broadband Service

I guess it was just a matter of time before white-label mobile broadband service offerings entered the mobile data lexicon. Spanish PC manufacturer AIRIS has recently concluded a promotion offering a mobile broadband laptop bundle with no specific operator branding. The white-label offer shows how mobile broadband is rapidly becoming a commodity in Spain and in most of Europe. AIRIS ran the promotion (see picture) with Spanish national daily newspaper El Mundo, offering a free ultra-portable laptop and modem to anyone who collected vouchers from the newspaper and signed up for either a 12-month contract with Telefonica or a 24-month contract with Orange Spain. Although the terms of the contract are not any more favourable than those offered directly by mobile operators, the lack of operator branding shows that operators are not the only players pushing bundled mobile broadband offers in Spain. 

The reason for such white-label mobile broadband offers in Spain becomes apparent when you consider that close to 30% of Spanish households have neither PCs nor fixed broadband – a ready target for mobile operators, PC vendors and who knows what in the future. This number is actually higher in Portugal (60%), Greece (40%), Italy (40%) as well as France (30%). Expect such white-label services to be launched in these countries very soon.

The flood of new MVNOs in Spain (most of them through Orange) has been the primary reason why non-mobile operators such as fixed Internet service providers are launching mobile broadband services. In addition to AIRIS, Spanish broadband operators Jazztel and Ono have also recently launched mobile broadband packages. Jazztel is offering both a prepaid tariff costing €0.20 per megabyte and a contract offering 250MB for €7.95 a month. The company offers its mobile Internet service as an extension to the mobile voice service it launched in June through its MVNO agreement with Orange.

Cable operator Ono is also promoting “free” mobile broadband up to 5MB a day under the brand BAMG (Banda Ancha Movil Gratis) for users who buy a dual- or triple-play bundle of TV, phone and fixed Internet. KPN-backed Simyo (offered through Orange again), for example, is undercutting the three network operators by offering up to 5GB of data transfer over HSPA for €24.99 a month, with no fixed contract length. While the data packages of Jazztel and Ono are fairly limited, KPN-Simyo has aggressively priced its mobile broadband offering – traditionally Telefonica and Vodafone have not been too willing to bring down the mobile broadband pricing premium (which is close to 45% above that of fixed broadband), Orange which has probably a lot less to lose has thrown the gauntlet through its MVNO partner.

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