Thursday, June 12, 2008

Will mobile broadband dominate?

The Times of London yesterday published an article entitled “Mobile to displace fixed-line internet 'within two years'”. To quote:

The mobile phone network may replace the copper wire as the principal method by which people connect to the internet in as little as two years, broadband experts predict.

Increased sales of laptops - which can be connected to the internet via the owner's mobile phone connection - the widespread roll out of high-speed mobile networks and the falling price of connecting to such networks have all contributed to the uptake of mobile broadband, they said.

One person in ten now regularly accesses the internet on a computer via a mobile phone connection, despite such services only having been on sale for less than a year, according to research released this week by You Gov. Of those, up to a third now connect their computers to the internet solely through the mobile network.

"This trend is as significant as the shift from home to mobile phones that took place in the mid Nineties," a spokesman for Top 10 Broadband, a price comparison site, said. "We predict that by 2010, mobile broadband will overtake home broadband as the default way to access the internet in the UK." A similar claim was made by Broadband Expert, another comparison site.
(It is not clear why they published an article this month based on a February press release by Top 10 Broadband).

It is interesting what the Times did not say. It did not claim that people would be giving up their 15" laptop screens for a 2.5", but instead that 3G dongles would supplant DSL as the primary consumer Internet access. (I also have two much larger screens at home and work, but obviously I could use them with a dongle connected to the same laptop). For my own use, both screen and keyboard size are key elements of the Internet value proposition (as when I research and post articles in this blog).

I don’t have any firsthand knowledge of British broadband (or the British broadband companies). On the one hand, I admit that in the past I have consistently underestimated mobile phone uptake in Europe. In 1996, I did interviews at Nokia and Ericsson and talked with my Finnish co-researchers and didn’t quite believe what they were telling me — including that penetration would go above 100% as some professionals carried two phones.

While I am willing to believe this will happen someday, the two year time horizon seems a little optimistic for several reasons.

One is shared broadband that is relevant to the majority of households: it makes sense for mobile singles, but does it apply to families? Three of us all use the same broadband subscription here at home, and of course we have friends who are families of four or five that also share their DSL or cable modem with the kiddies. Will people buy 3? 4? dongles and 3-4 subscriptions?

The second is the assumption that the wireless vs. wired technical capabilities will soon be at parity. One part of this is that mobile carriers can deliver ITU-claimed speeds over the air to a large number of users at the same time. shared bandwidth on a wireless network will deliver the ITU-claimed speeds. The other is that the wired rivals will sit idly by, and be unable to deploy 20, 50 or 100 mbps fiber to the home (as is happening in Japan, Korea and the US).

The third is that mobility is valued by people enough to switch from their fixed Internet line to their mobile line. This seems applicable to people who spend a lot of time in their coffee shop — or can get a 3G signal to surf the web during a long above-ground train commute. But does it apply to a large number of people who spend most of their day in two places, home and at work?

The argument does appear consistent with the marketing pitch that Verizon Wireless is making in its latest ads: Wi-Fi is a prison that holds you in a very small cell, but their (EV-DO) 3G dongle will allow you to use the Internet anywhere. I don’t know how successful their pitch has been.

But this brings me to my main point. Internet access is a commodity — I don’t care what route my bits take, as long as they get to my computer (or other device) quickly. Commodity services are, well, commoditized: people shop based on price. Mobile phone penetration in the US and Japan went nowhere until there were more carriers, more competition and much lower prices.

So unlimited data plans at $50/month per person are not going to fly at our (admittedly lower middle class) household. A family plan of data service for all of us at $50/month looks attractive. Then we’d just need to find a carrier that has coverage for us here up against the mountain. (The mountain shown at the top of my home page).


broadband expert said...

There are two main issue (in the UK at least) with mobile broadband:

1): Coverage at speeds over 2Mbps is not universal, even though the mobile providers push the message that it works "wherever you get a mobile signal", it really only works well in around 50% of the landmass.

2): There is fixed bandwidth in a mobile cell, the more people in the cell the greater the contention rate. The more people take up the service the poorer the end user experience will be.

It will take significant investment by the mobile networks for the mobile broadband revolution to be able to carry on it's current rate of growth.

Oh and concerning your point about the mobile broadband being aimed at solo machines, yes this is a good point, but there are routers now coming out on the market that accept a mobile "dongle" or the SIM card to be inserted so that you can then have a wireless network that uses a mobile connection for its public interface.

Joel West said...

Thanks for the comments. On point #1, the US GSM carriers are clearly lagging the UK carriers, but even with the EV-DO carriers, US carriers don't seem to be getting enough use yet to justify the infrastructure investment.

On point #2, I thought I'd made that point with my December posting (that I linked) but in any event I totally agree.