The continual rise in the number of consumers taking mobile broadband has severely strained network capacity, resulting in deterioration in the user experience. Mobile operators have rushed to invest in their networks, but a closer look at the habits and tendencies of mobile broadband subscribers reveals that there are far less painful solutions to the issues of network quality. Because the majority of mobile browsing takes place in buildings, operators should focus on expanding their Wi-Fi offerings, instead of accelerating their 3G network capex to cope with the demand for bandwidth.
Analysys Mason forecasts that mobile broadband traffic in Central and Eastern Europe (CEE) will continue to rise, largely as a result of subscriber net additions. In the first three years after the launch of mobile broadband, a number of markets in CEE are expected to achieve triple-digit annual growth in subscriptions, putting significant strain on network bandwidth. The effect of this on subscribers has important implications for operators. We believe that average mobile broadband traffic per subscriber has already started to level off, as users find that connection speeds are slower than advertised and the reliability of networks is poor. According to a recent Analysys Mason report, up to 70% of datacard users in Poland are considering supplementing their mobile connections with fixed broadband offerings.1
The popularity of, and rise in, laptop-connectivity throughout CEE stemmed from the poor availability and high cost of fixed broadband connections. The easing of regulatory restrictions, and the subsequent increase in competition, has helped to accelerate investment in broadband networks, improving coverage and exerting downward pressure on tariffs. The speed and price of Internet packages from some providers in CEE now rival those of packages available in Western European markets. Between 2006 and 2009, residential broadband penetration in CEE rose from 10.3% to 27.1%. Further decreases in the price of fixed broadband services, combined with expanded coverage, will bring home broadband services into direct competition with mobile services.
Of all broadband households in CEE, those taking only fixed currently represent 82%. Analysys Mason expects this proportion to fall to 53% by 2015. Households taking only mobile broadband will continue to increase in number, but will account for only 17% of all broadband households by 2015 (see Figure 1). Instead, the next great opportunity for fixed and mobile operators will be to cater for the growing number of households that take both fixed and mobile broadband services.
Figure 1: Fixed and mobile, fixed-only and mobile-only broadband households in CEE, 2009–2015 [Source: Analysys Mason, 2010]
Analysys Mason recommends that mobile operators look to Wi-Fi networks for a quick-fix solution to their short-term problems with the quality and availability of data networks. If they transfer to fixed-line networks the in-building traffic that accounts for nearly 80% of all mobile broadband traffic, operators can focus on expanding their network coverage to compete with growing fixed broadband availability in rural areas and on building up capacity in urban centres. As the number of both fixed and mobile broadband households in CEE is forecast to increase, mobile operators will have a significant opportunity to upsell by offering their existing customers reliable, high-speed fixed broadband connections for their at home browsing needs. At the same time, money saved on network roll-out and maintenance can be used to offer lower prices, potentially making mobile broadband affordable for more customers.
For fixed-line operators, the growth in the number of fixed and mobile broadband households represents a low-cost opportunity to expand into the mobile market. Fixed-line operators with large Wi-Fi networks will find significant cost-saving synergies in rolling out mobile networks that can transfer data access onto their fixed broadband networks. Mobile operators have been offering Wi-Fi browsing to their mobile broadband customers as an add-on, but a number of fixed operators may start to experiment with capitalising upon their fixed assets to launch full-scale mobile networks.
1 Hatton, M. and Scott, M., Mobile broadband survey: analysing consumer attitudes and usage, Analysys Mason, (London, 2010).