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.
While Mobilkom Austria initiated the trend, the accompanying picture shows that the remaining mobile operators such as T-Mobile and (3) have positioned the standard “broadband 3Gbytes usage package” very competitively vis-à-vis fixed offers and are also matching the prices at the higher end. This has led to mobile broadband subscriber growth for all the operators.
Austrian operators have also started to redefine their offerings in order to create significant value to the customers. For example, (3) Austria has introduced an innovative FMC product promotion – combining Playstation, WiFi router, mobile TV and flat data. This is the first bundle of games console with flat-tariff mobile broadband contract.
The Dilemma: While Austrian operators have become extremely successful in positioning mobile broadband as a viable alternative to fixed broadband, it remains to be seen how they cope up with the increased traffic on their mobile networks (see accompanying Figure about Mobilkom Austria’s traffic growth). They are looking at femtocell architectures, but that would require them to partner with fixed broadband players, a dependency they would like to avoid. In addition, femtocells are not viable in households without a fixed broadband option – which is the market they are trying to sell into in the first place!