The reality of mobile broadband

Mobile Network Operators (MNOs) have been progressively bringing their HSPA services to market, taking speeds beyond the megabit level. The GSM Association reported that 163 HSPA networks had been commercially deployed in 73 countries at March 2008. All the major MNOs recognise the strategic importance of non-messaging mobile data. The market is clearly showing potential for high growth, and mobile data is one solution to the long-term downward trend in mobile voice revenue.

Performance can be an issue compared to fixed-line alternatives. Most of today's HSPA services are promoted with headline downstream speeds of up to 3.6Mbit/s. In reality, users of HSPA services typically achieve download speeds of approximately 1Mbit/s. Some users report that upload performance is significantly worse - around 100kbit/s or less. These speeds are sufficient for Web-browsing and email, but do not compare particularly well with fixed-line broadband speeds, and are inadequate for certain applications, including online gaming.

HSPA services are not widely available. Many MNOs are continuing to build out their UMTS networks, meaning that not all potential users can benefit from the highest speeds. In areas where HSPA is not available, the service reverts to EDGE or even GPRS data rates, which will not give the user a broadband experience. Additionally, the current need for handover between 3G and 2.5G results in lower speeds, adding to user frustration when on the move.

MNOs are using price as a mechanism for managing limited capacity. HSPA services have entry-level prices that are lower than the cheapest xDSL services, but have low usage limits. Higher usage tariffs are currently targeted at the niche user who absolutely needs the benefit of mobility and is prepared to pay for it. Most HSPA tariffs have lower monthly data volume allowances ("˜caps') than competing fixed-line broadband offerings. This is unsurprising given that the capacity of available mobile spectrum is much lower than wireline solutions. At this stage, MNOs can constrain demand for HSPA services using high pricing, allowing MNOs to manage the rather variable customer experience while completing and upgrading their 3G radio access networks.

Despite the constraints on network speeds and capacity, there is a promising future for application support using HSPA and broadly equivalent mobile technologies. Data rates should start to increase during 2008 - many MNOs will soon be able to offer download speeds of up to 7.2Mbit/s - making services more attractive to some user segments. HSPA has a roadmap that will progressively take mobile broadband speeds well into double digits. Beyond 2010, LTE will take UMTS towards ultra-high-speed capabilities. MNO HSPA service packages are relatively new, but will evolve. Analysys Research therefore expects the following developments over the next two to three years.

"¢ Maximum speeds will increase, allowing MNOs to offer an increased choice of packages, better targeted to consumers and enterprise users alike.

"¢ Service bundles from MNOs will evolve and will include voice and messaging minutes.

"¢ Prices will fall - partly due to the bundling of broadband data and voice services, and platform evolution.

"¢ MNOs' partnerships with content and application providers may give them a marketing advantage when it comes to offering multimedia solutions.

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