More United Kigndom IP Communications Stories

Researchers predict that more than one billion people around the world will be using mobile broadband by 2012. For a global business now in the process of replacing voice revenue with broadband and other sources, that is good news. Parks Associates (News - Alert), for example, suggests that U.S. mobile broadband subscribers will more than triple by 2013; growth from 46 million in 2008 to more than 140 million subscribers in 2013.

 

The bad news is that data services generate as little as one-twentieth the price per bit of voice traffic.

 

The good news from researchers at Ovum (News - Alert) is that users accessing mobile broadband-enabled laptops and handsets will increase revenue by more than 450 percent in 2014 compared to 2008, representing about $137 billion in new global revenue.

 

The bad news is that some mobile providers overpaid for their 3G spectrum, and will have a tough time earning a return on the spectrum expenses, despite all that growth.

 

Vodafone, for example, paid about $10 billion for its 3G spectrum. Collectively, U.K. mobile providers paid about £100 per citizen or $160/pop.

 

Assuming Vodafone gets about 25 percent share of the mobile broadband market, it would have to earn £500, or about $817, from each customer over the 25 year license period to pay for the 3G spectrum, exclusive of other marketing and operating costs.

 

If a typical customer lifecycle is three years, roughly $272 a year in spectrum amortization for each customer, or about $22.70 a month is the result. Consider that, at the moment, monthly average revenue per user is about $37 a month.

 

To be sure, revenue drivers are changing from voice to data. T-Mobile (News - Alert) reported as early as April 2008 that the volume of data traffic on its network in the United Kingdom had exceeded that of voice traffic for the first time in the first quarter 2008.

 

But even if mobile operators are able to offset 100 percent of declining voice revenue, the challenge remains. It's less challenging to make a business out of $89 per month revenue when attributed spectrum costs are $22 to $23 per month. It is more challenging when ARPU is $63 a month. And that's about the current range within which U.K. mobile operators now operate.

 

And ARPU in the U.K. mobile business has been dropping over the last year or so. That poses a problem as bandwidth consumption continues to rise.

 

Ovum expects 258 million users to access mobile broadband services through laptops by 2014, which translates into 1022 percent growth from 2008. And while most recent attention has been focused on network demand from smartphones, broadband PC connections are a separate matter, as consumption from mobile PCs is substantially greater than from smartphones, at least at the moment.

 

French operator SFR (News - Alert) claims laptops equipped with a dongle use 450 times more bandwidth than a classic mobile phone, though the delta with smartphones is less. But the fundamental challenge is similar: far-lower revenue per bit from data services will be a key issue as data access becomes the revenue driver