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Author Topic: Article: Is it the end for mobile broadband?  (Read 4307 times)
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mobaholic
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« on: July 12, 2010, 03:42:56 PM »


Mobile broadband sales have tumbled by more than half, claim reports.  Is the slide terminal?

Mobile broadband sales are plummeting, but experts are divided on what is driving that fall.

One theory is that operators are curbing mobile broadband growth in an attempt to limit data traffic on their increasingly crowded networks.  Others point to consumer dissatisfaction with a service that fails to live up to the hype of mobile broadband operators.

Meanwhile, some argue the market for regular users has become saturated, and that mobile vendors have to work harder than ever to attract a new demography of occasional users to mobile broadband.

Experts may be divided on the root cause, but one thing is clear.  Sales of mobile broadband are spiralling, leaving network operators facing yet another dwindling revenue stream.

A report by GfK’s retail and technology division reveals that mobile broadband contract sales for May 2010 have fallen by 30.2% compared with sales in May 2009.  At the same time, sales have risen in the mobile broadband prepay market and in cheaper and shorter mobile broadband contract deals.

The report points to operators attempting to limit data traffic on their networks as a key driver.

GfK highlights the rise in cheaper mobile broadband deals, particularly those below £10, which have grabbed a 20.8% share of the market for May 2010 despite only being available since August last year.

‘This growth of the 0-£9.99 point shows that the market is slipping down into the lower priced areas, with lower data allowance attached,’ says David Nelmes, analyst at GfK.

Shorter contracts are also on the rise.  In May 2009, one month contracts held a 4.3% share of the market. Results for May 2010 show this figure has soared to 24.7%.

Nelmes says: ‘These trends are in stark contrast to the mobile broadband prepay market, which continues to grow as operators look to reduce ‘traffic’ on their networks by reducing the amount of use for their mobile broadband customers.’

He adds: ‘The large increase in shorter commitment shows how operators are trying to reduce usage for the consumer.’

GfK predicts that this fall in mobile broadband contract sales will continue, with contract sales that include a laptop the hardest hit, falling month on month.

Nelmes says: ‘Operators have seen their amount of network traffic soar since the launch of mobile broadband, and the trends in the contract market are showing us how the operators are attempting to pull back some of this usage.’

Web comparison site Broadband Expert echoes GfK’s findings.  It reported a 57% drop in people signing up for mobile broadband via the site in the last 12 months to May.

Broadband Expert attributes the fall to consumers becoming disillusioned by overblown claims on mobile broadband’s capability by some providers.

Mobile broadband sales dropped from around 3,000 in May 2009 to 1,300 in May 2010 on Broadband Expert’s site.

These findings are borne out by data from Experian Hitwise, which reports a 50% drop in web searches for the phrase ‘mobile broadband’ in the same period.

Rob Webber, Broadband Expert’s commercial director, says slow speeds and poor coverage are driving customers away.  ‘Mobile broadband experienced phenomenal growth in the UK as consumers expected all the benefits of a home broadband connection while on the move.  Sadly, the technology has not lived up to the hype; we receive a huge amount of customer feedback complaining of inconsistent or non-existent connections and speeds similar to dial-up or worse.’

Webber believes the arrival of LTE will revive mobile broadband’s fortunes, but the UK has some time to wait.

‘We’re already seeing companies rolling out LTE networks in the US and Europe but the UK is still 12 to 18 months away from this.  LTE should boost mobile broadband speeds massively, with downloads speeds of over 100Mbps achieved in testing; so it could outperform and even replace home broadband in the future.  However, the UK needs to work faster to adopt the new technology required to reinstate consumer faith in the mobile broadband service and help sales recover to their former level.’

What the analysts say...

Phil Kendall, analyst at Strategy Analytics

‘The number of mobile broadband users is good but the volume of sales has slowed down.  It is a maturing market and it is now becoming harder work so they are having to go after the more casual users now.

‘I don’t think the fall is because of desperate operators trying to manage traffic loads.  That is overstating the case, although there is an element of that, with operators pulling their more aggressive mobile broadband promotions.

‘However, the market is maturing and users are realising mobile broadband is not all it was cracked up to be. Consumers still see a value in it but more as an ad hoc thing with a move towards prepaid.’

John Strand, MD of Strand Consult

The problem in the UK is that O2, Vodafone, Orange and T-Mobile have underinvested in their networks and so they do not want to aggressively promote mobile broadband.  The only operator in the UK aggressively pursuing mobile broadband customers is 3.

‘Talk Talk and BT do not want to jeopardise their fixed-line business so they are not aggressively promoting mobile broadband either.

‘The UK is lagging behind on mobile broadband.  The UK’s market penetration is around 8% compared with Scandinavia, where mobile broadband market penetration stands at around 14% to 16%.’

See:-   MobileToday.

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srikanth.nuli
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« Reply #1 on: July 13, 2010, 03:25:10 AM »

I personally did not have good experience of high speed data access using mobile broadband in UK. The net speed is too slow and also the data charges are very high once you finished you predefined limit or allowance. All these made me reluctant to use this service any more.
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