Portio Mobile Factbook 2013
Free Telecoms Market Research Reports
Broadband & Fixed
Handsets & Devices
Information & Communications Technology
Media & Entertainment
Mobile Content & Applications
Networks & Infrastructure
Terms & Conditions
The last 18 months have seen a huge upswing in the adoption of mobile broadband (MBB) globally, especially relating to PC connectivity through 3G USB "dongles", as well as high-end smartphones like the Apple iPhone. For the mobile industry, MBB has been one of the few bright spots, especially in mature markets where the recession (and regulation) has impacted voice and SMS revenues. For many operators, PC-based data revenues have eclipsed lacklustre growth of content and data services on handsets.
Figure 1: Global mobile broadband computing users
Source: Telco 2.0, Disruptive Analysis
Looking forward, many in the mobile industry are now expecting other MBB products and user scenarios to drive revenues further – netbooks (mini-laptops), smaller "mobile Internet devices" (MIDs) and embedded-3G notebooks are all being advocated. Further out, there is the potential for a vast array of other devices from the realm of consumer electronics or M2M (machine-to-machine) sectors.
A victim of its own success?
But there is a dark side of current MBB business models, despite the success. PC users generate so much data traffic that networks that were empty just two years ago are now congested. Originally designed ("dimensioned") to cope with small-screen devices used occasionally, HSPA networks are having to cope with laptop-sized video downloads, hours-long social networking sessions and rich Web 2.0 sites which download content "in the background". Extra iPhone usage compounds the problem.
In some cases, the revenues from MBB services are not even covering the costs of delivering data to the users. The current business models are broken – especially if they also need to provide enough cash flow for further network upgrades and expansion. Despite the wishes of marketing departments, it seems like expensive "mobile" broadband capacity is being wasted at giveaway prices, in an attempt to compete head-on with fixed broadband services.
Figure 2: Global 3G data traffic by device type
Source: Telco 2.0, Disruptive Analysis estimates
This report is not going to rehash the basic market forecasts for MBB and devices, which are well-covered elsewhere. Instead, this document looks at the need for a set of new business models around mobile broadband. This partly reflects the cornucopia of new devices, partly the impact of the insatiable demand for more bandwidth – but also methods for operators to innovate and seek out revenue streams beyond the normal monthly contract. MNOs need to squeeze more cash from their network and spectrum investments – but it needs to be profitable traffic.
There is clearly a demand for basic, vanilla, mobile Internet access from laptops or netbooks. But even that can be packaged in many different ways, rather than unimaginative and undifferentiated data plans, that just encourage constant price erosion amongst competing operators.
An overview of the new business models needed
At present, the majority of mobile broadband subscribers are engaged through traditional monthly contracts, typically over 12-24 month periods. This is true for both standalone modems and especially embedded-3G notebooks. There are also some popular prepaid offerings, especially in markets outside North America.
However, further evolution is necessary. Many consumers will not want another monthly commitment, especially if they are infrequent users. Operators will be wary of subsidising generic computing devices for the non-creditworthy.
We expect a variety of new business models to emerge and take a significant share of the overall user base, including:
Session-based access, similar to the familiar WiFi hotspot model;
Bundling of mobile broadband with other services, for example as an adjunct to fixed broadband or mobile voice services;
Free, guest or "sponsored" mobile broadband, paid for by venue owners or event organisers;
"Comes-with-data-included" models, where the upfront device purchase price includes connectivity, perhaps for a year;
Two-sided business models, with mobile access subsidised by "upstream" parties like advertisers or governments, rather than direct end-user payment.
Transition to these models will not be easy. There are question marks about the convenience of using physical SIM cards, especially for temporary access. Distribution, billing and support models will need re-evaluation. Definitions and metrics will need re-evaluation. Terms like ARPU and "subscription" will have less relevance as conventional "subscribers" drop to perhaps 40% of the overall mobile broadband user base. Operators and vendors need to face up to these challenges as soon as possible.
Figure 3: Mobile broadband can support both subscription & transient models
Source: Telco 2.0
Who is this briefing for?
Strategists, network planners, mobile data marketing executives, radio network vendor strategy & marketing staff, laptop and mobile device suppliers.