Behind the satisfaction of mobile operator executives over the success of mobile broadband services lies an uneasy concern over the implications of continued take-up of such services. Unwired Insight has developed models that forecast, for the first time, realistic future 3G traffic levels and network capacities, to determine if 3G networks are going to be able to cope. The new report provides disturbing reading.

“3G networks have nowhere near the capacity of fixed broadband networks and some 3G networks will quickly become swamped by traffic,” says co-author Dr Alastair Brydon

Key findings of the new report are:

• With the vast majority of cellular users still supported by 2G networks, 3G networks have been underutilised. This is about to change, as cellular users rapidly migrate to 3G services. 3G penetration will reach 120.1% of the population in developed markets by 2014. By this date, 3G will account for over 90% of all cellular (2/2.5/3G) handsets and terminals.
• Mobile broadband services will account for the largest proportion of 3G traffic volumes, and will be one of the biggest challenges for 3G operators. While USB modems and datacards will represent only 16% of 3G devices, they will contribute 73.5% of all 3G data usage by 2014.
• Smartphones, such as the Apple iPhone, will continue to generate significantly higher data usage than more basic mobile phones. The attractive services enabled by smartphones will cause their proportion of the total number of 3G devices to increase from 8% at the end of 2008 to 36% at the end of 2014.
• The overall mix of wireless network traffic will change significantly between 2009 and 2014, with traffic-intensive data services dominating the mix. By 2014, data services will account for 99.4% of all service usage. Video streaming and downloads will contribute the largest proportions of total data usage, at 56.4% in 2014. This is because video services will require a relatively high data rate and will be popular services, being adopted by many users and used for a significant period of time.

“On average, 3G networks will need to support over 1GB per month of traffic per user,” says co-author Dr Mark Heath. “While such usage is perfectly manageable for fixed broadband networks, most HSPA networks will not be able to support anywhere near this level,” he warns.

The new report ‘Will 3G Networks Cope?’ published by Unwired Insight addresses one of the biggest concerns within the mobile industry, as to whether 3G networks will be able to cope with future increases in 3G traffic volumes.

The report gets to grips with this critical issue by quantifying how 3G network capacity and 3G traffic will evolve over the next five years. The report contains 120 pages, 29 figures, 18 tables and 30 000 words. For more information, or to buy the report, click here, email contact@unwiredinsight.com or telephone +44 (0) 1480 819391. Dr Alastair Brydon and Dr Mark Heath are authors of more than 40 reports on key issues in the mobile industry.

A free whitepaper associated with the report is available to download from the Unwired Insight website.

3G traffic volumes are set to increase by a factor of 20 by 2014, driven by many factors, including the increased adoption of traffic-intensive services such as mobile broadband and mobile TV services, the increased proportion of smartphones and dramatic reductions in mobile data pricing.

Dr Alastair Brydon, co-author of the new report says, “Pricing of mobile data has changed dramatically since the days that SMS was the dominant service. Mobile broadband pricing has fallen as low as USD2 per gigabyte, which is nearly half a million times smaller than the price per gigabyte of an SMS message.”

Key findings of the new report are:

• As 2G users continue to migrate to 3G services, the available capacity per 3G user will decline rapidly in networks utilising HSPA, to less than 100MB per user per month in some cases. LTE will be essential to counter this decline.
• While LTE promises peak data rates of over 100Mbps, this is only possible with wide allocations of spectrum, and even then is only experienced by a few lucky users that have particularly good radio conditions. Other users will achieve much lower data rates, so the average data rates from practical LTE networks will be nowhere near the peak values.
• Network operators will have an insatiable appetite for LTE spectrum, to stand any chance of keeping up with forecast traffic demand. For some operators, 10MHz of spectrum will be able to support forecast traffic levels only until 2011. A further 10MHz will be needed by 2012 and another 10MHz in 2013. In addition, some operators will have to embark on major network expansion programmes to keep pace with forecast traffic levels.

“LTE’s ability to relieve the capacity constraints of HSPA networks will be limited initially, until operators can acquire additional spectrum and seed a sufficient number of LTE devices in the market place,” says co-author Dr Mark Heath. “We don’t expect to see LTE handsets until 2011,” he warns.

The new report ‘Will 3G Networks Cope?’ published by Unwired Insight, addresses one of the biggest concerns within the mobile industry, as to whether 3G networks will be able to cope with future increases in 3G traffic volumes. The report gets to grips with this critical issue by quantifying how 3G network capacity and 3G traffic will evolve over the next five years.

The report contains 120 pages, 29 figures, 18 tables and 30 000 words. For more information, or to buy the report, go to the website www.unwiredinsight.com, email contact@unwiredinsight.com or telephone +44 (0) 1480 819391. Dr Alastair Brydon and Dr Mark Heath are authors of more than 40 reports on key issues in the mobile industry, with more than 250 different organisations worldwide using their insight.

A free whitepaper associated with the report is available to download from the Unwired Insight website.

“Many 3G network operators are in for a tough time over the next few years,” says co-author Dr Alastair Brydon. “If they don’t now start using complementary distribution methods, such as femtocells and broadcasting networks, 3G networks will not be able to cope with future traffic demand, even with LTE,” he added.

Key findings of the new report are:

• Vodafone was the first 3G operator in Europe to launch a femtocell product in July 2009, signalling the start of femtocell roll-out in Europe. Indoor wireless systems should be a core part of the delivery platform for 3G operators, and they should use both WLAN and femtocells to deliver services through fixed broadband connections wherever they can. By 2014, indoor systems could deliver 13.8% of total service traffic.
• Separate TV streams to each 3G user can quickly use up 3G capacity. Despite a slow start, dedicated broadcasting networks, such as DVB-H, can be an effective way of minimising the traffic carried on conventional 3G networks. Also, developments such as eMBMS and IMB provide the option of delivering broadcast services over existing 3G networks. 8% of service usage could be carried by broadcasting solutions by 2014.
• Sideloading – where content can be transferred from a PC to a mobile phone and stored in its memory – could become an increasingly important method for delivering multimedia content to 3G devices, thereby avoiding the use of conventional 3G networks. More than one-fifth of service usage could be delivered using sideloading by 2014.

“Taken together, indoor systems, broadcasting networks and sideloading could collectively deliver 43% of total service traffic by 2014,” says Alastair Brydon.

The new report published by Unwired Insight addresses one of the biggest concerns within the mobile industry, as to whether 3G networks will be able to cope with future increases in 3G traffic volumes.

The report gets to grips with this critical issue by quantifying how 3G network capacity and 3G traffic will evolve over the next five years. The report contains 120 pages, 29 figures, 18 tables and 30 000 words. For more information, or to buy the report, click here, email contact@unwiredinsight.com or telephone +44 (0) 1480 819391. Dr Alastair Brydon and Dr Mark Heath are authors of more than 40 reports on key issues in the mobile industry.

A free whitepaper associated with the report is available to download from the Unwired Insight website.

Since 2007, 3G networks worldwide have experienced substantial traffic growth, as some 2/2.5G customers have moved to 3G services and mobile broadband services have emerged. According to the new report, this is just the beginning. Surplus HSPA capacity will soon be occupied, with continued take-up of mobile broadband services and the migration of most 2/2.5G users to 3G services within five years.

Mobile broadband services are already having a profound impact on 3G networks, and yet mobile broadband penetration is still lower than 10% in most countries,” according to report co-author Dr Mark Heath. Such services are extremely network-intensive. “A mobile broadband customer using 1GB per month consumes the equivalent network capacity of over 7000 minutes of voice telephony,” adds Heath. Currently, the majority of mobile users are still supported by 2G networks. “Within the next five years, the vast majority of 2G customers will migrate to 3G services, substantially increasing traffic volumes,” warns Heath.

Some of the key findings of the new report are:

• In the five year period to the end of 2014, 3G traffic volumes in developed markets will increase by more than 20 times. Drivers for these rises include increasing 3G penetration, continued adoption of mobile broadband services, escalating penetration of smartphones, proliferation of flat-rate service bundles and increasing usage of 3G devices indoors.
• There are significant differences in the outlook for different types of 3G operator. Some incumbent 3G operators with large customer bases will face HSPA capacity shortfalls in mid-2010, or even earlier if customers migrate rapidly from 2/2.5G to 3G services.
• In contrast, new-entrant 3G operators will not suffer from severe short-term limitations of HSPA capacity, and will have a two-year window of opportunity to aggressively promote mobile broadband services.

The report warns 3G operators that they need to take action now, before it is too late.

According to co-author Dr Alastair Brydon, “The effect of 3G network capacity shortfalls will be that service users experience degradation in the quality of service provided by a 3G operator, particularly at times and locations at which the network is heavily used.” He adds, “This is likely to cause serious dissatisfaction among users.”

The report discusses the actions that operators can take to delay HSPA capacity problems, such as tariff changes and fair usage policies, slowed migration of 2/2.5G users to 3G services and deployment of femtocells.

The new report ‘Will 3G Networks Cope?’ published by Unwired Insight addresses one of the biggest concerns within the mobile industry, as to whether 3G networks will be able to cope with future increases in 3G traffic volumes.

The report gets to grips with this critical issue by quantifying how 3G network capacity and 3G traffic will evolve over the next five years. The report contains 120 pages, 29 figures, 18 tables and 30 000 words. For more information, or to buy the report, email contact@unwiredinsight.com or telephone +44 (0) 1480 819391. Dr Alastair Brydon and Dr Mark Heath are authors of more than 40 reports on key issues in the mobile industry.

A free whitepaper associated with the report is available to download from the Unwired Insight website.

Total wireless network traffic from cellular users in developed regions is set to increase substantially, driven by: improved cellular devices (such as USB modems and smartphones); widespread deployment of advanced 3G technologies and femtocells; affordable pricing (particularly for traffic-intensive services); more indoor usage of cellular devices; and increasing size of items of Web content.

“While developed regions will account for just 25% of the cellular user population by 2015, they will generate 65% of total global wireless network traffic,” according to Dr Mark Heath, the report’s co-author. “This is due to a higher proportion of advanced handsets and the earlier deployment of more advanced cellular technologies, such as LTE, which have higher throughput.”

Key findings of the new report include:

• Historically, voice telephony has dominated wireless network traffic, and popular data services, such as SMS, consume a tiny amount of network resource. However, the take-up of USB modems and a broad range of data services on smartphones will increase wireless network traffic. Average wireless network traffic per cellular user (for all voice and data services) in developed regions will increase to eight times its 2008 level by 2015, rising from 56MB per month to 455MB per month.
• While voice traffic will continue to increase, as a result of on-going fixed-mobile substitution, data traffic will rise at significantly faster and come to dominate wireless network traffic. By 2015, data will account for 94% of total wireless network traffic in developed regions.
• A number of uncertainties could result in traffic levels differing from our base-case forecasts. An upside forecast derived by Unwired Insight indicates that by 2015, traffic per customer in developed regions will grow to almost 30 times its level in 2008.

“Strong take-up of USB modem services could result in traffic per cellular customer increasing to as much as 23 times its 2008 level by 2015. Mobile operators may need networks that are able to support a huge increase in traffic, and should review their strategies towards USB modem services,” says Dr Alastair Brydon, the report’s co-author.

“In the short-term, underutilisation of 3G networks allows mobile operators to offer low-cost USB services, but operators may be forced to rethink their strategies when they are confronted by the need to make further network investment.” Wireless Network Traffic, 2008-2015: forecasts and analysis provides detailed forecasts of wireless network traffic, broken down by terminal and service type, for each major region of the world (Western Europe, North America, developed Asia, Central and Eastern Europe, Central and South America, developing Asia and the rest of the world).

Globally, 2.1 billion wireless broadband customers will generate USD784 billion in service revenue by 2015. This revenue increase of about 2400% will be underpinned by continued developments in wireless technologies, improvements in devices and more flexible pricing options.

HSPA will support 88% of all wireless broadband consumers at the end of 2008, and its importance will continue.”Despite the increasing availability of LTE and WiMAX, HSPA and HSPA+ will still support 54% of wireless broadband users by the end of 2015,” according to Dr Mark Heath, co-author of the report.

Key findings of the new report include:

• Because W-CDMA to HSPA to HSPA+ is the natural evolution path for GSM operators, the number of HSPA and HSPA+ customers worldwide will increase from 61 million at the end of 2008 to 1.1 billion at the end of 2015.
• Cellular technologies will dominate wireless broadband services, with twenty times as many users as WiMAX by the end of 2015.
• LTE will take off relatively slowly, but its customer base will reach 440 million by 2015, with associated revenue of USD194 billion.
• WiMAX will be squeezed from developed markets by fixed and cellular broadband services and by 2015 will serve just 98 million customers worldwide, of which 92% will be in developing regions.

WiMAX will fail to achieve a significant share of the rapidly developing wireless broadband market, contributing only 2% of global revenue. “By 2015, there will be twenty times as many customers for cellular broadband services as for WiMAX,” according to Dr Alastair Brydon, co-author of the report, “The vast majority of MNOs will not break ranks to WiMAX, but will upgrade to LTE, resulting in over four times more LTE users by the end of 2015.”

Wireless broadband forecasts for 2008-2015: HSPA, HSPA+, EV-DO, LTE and WiMAX provides detailed global forecasts for wireless broadband subscriber numbers, revenue and ARPU for the period 2008-2015. Forecasts are broken down by wireless broadband technology (HSPA, HSPA+, EV-DO, LTE and WiMAX) and by region.

There is of course considerable speculation about what next to expect from Apple’s iPhone ahead of CEO Steve Jobs’ keynote at the annual Worldwide Developers Conference (WWDC) in San Francisco on Monday.

“The iPhone could become the mobile video delivery device of choice for many consumers, by providing a compelling mobile TV and video proposition before mobile broadcasting networks, such as DVB-H become widely available,” says Mark Heath, co-author of the new report iPhone Shows the Way for Mobile TV.

Many operators are offering mobile TV services, using 3G streaming, but these are constrained by lack of coverage, relatively poor quality of service and 3G capacity limitations (as 3G networks may only support relatively low penetrations of mobile TV users).

Market research shows that many iPhone owners have accessed TV and video content, with greater frequency than subscribers using other types of mobile handsets. With added 3G capability, the iPhone will bring the following highly attractive attributes to the mobile TV market.

Video-friendly specifications, including high-quality widescreen display, substantial internal memory and low battery consumption. Access to a rapidly increasing range of TV and video content provided by Apple or specifically optimised for the iPhone. By May 2008, the iTunes Store had a catalogue of 600 TV programmes and over 1500 films and, by April 2008, Apple iTunes had sold 125 million TV programmes.

The ability to support multiple methods of delivering TV and video content, including sideloading, indoor WLAN and high-speed 3G cellular data access. Sideloading and indoor WLAN minimises the amount of TV and video traffic that needs to be carried on 3G networks, allowing 3G operators to support high rates of mobile TV penetration.

While iPhone take-up has been relatively modest, with cumulative sales of about 5.4 million units by the end of March 2008, this is due to Apple’s initial strategies of constraining worldwide availability and launching exclusively with a single operator in each market. As Apple moves away from these restrictive distribution strategies, there could be substantial growth in the number of iPhones sold.

“If the iPhone is able to achieve significant worldwide market share, it will be well-positioned to have a significant impact on the way mobile subscribers purchase and watch mobile TV and video content,” adds Dr Alastair Brydon, co-author of the report.

Many MNOs already offer TV and video services over their 3G networks. Concerns over capacity and quality of service are driving MNOs to combine 3G networks with dedicated mobile broadcasting networks (such as DVB-H and MediaFLO). However, these are not the only ways of delivering mobile TV content. Indoor wireless systems (such as femtocells and WLAN) and sideloading (where content is transferred from a PC or other device to memory in a mobile handset) are important delivery mechanisms with valuable benefits.

“iPhone users can already watch a range of TV content without the need for 3G or mobile broadcasting capability, using sideloading and WLAN streaming,” says Dr Alastair Brydon, co-author of the report.

Key findings of the new report include:

• Trials of DVB-H services have shown significant indoor usage of mobile TV services, with 36-50% of participants using these services mainly at home. Indoor systems such as femtocells could successfully carry this traffic, potentially with higher quality than is achievable with outdoor 3G and broadcasting networks.
• Sideloading can be a highly effective way of delivering content that is not time critical, such as pre-recorded TV programmes (for example soap operas, dramas, situation comedies and documentaries) and movies. Compared to other mobile TV distribution methods, sideloading can provide guaranteed reliability in any location, with very high quality. For example, video content available on iTunes for Apple iPods and iPhones is encoded at a data rate of over 1Mbit/s, compared with 128kbit/s for some 3G services.
• MNOs that are unable to deploy broadcasting networks could potentially deliver a compelling proposition without filling up the capacity of their 3G networks. If 75% of mobile TV content was delivered using sideloading and 60% of streamed content was consumed indoors, then 3G networks would need to carry just 10% of total mobile TV traffic.

Critical Ingredients of Mobile TV: femtocells and sideloading, considers the role of indoor wireless systems and sideloading alongside 3G macrocells (including HSPA, HSPA+ and LTE) and broadcasting networks (such as DVB-H and MediaFLO). The report analyses the capabilities and limitations of each technology, and maps these against the factors that will influence customer choices on mobile TV services. Using modelling of typical 3G networks and service mixes, the report assesses which technologies are required to deliver a compelling service proposition and which may be unnecessary. It also considers how operators can best take advantage of the range of different mobile TV delivery mechanisms, some of which may not be in their direct control.

“Despite a number of announcements made around the time of 3G licence awards, the mobile industry was not ready to adopt extensive network sharing,” said Dr Alastair Brydon, co-author of the report.

“Early interest in infrastructure sharing evaporated, and mobile operators chose to build and operate their own dedicated 3G networks. However, network sharing is back on the agenda. Mobile operators face major expenses in the coming years, including investments in femtocells, LTE, broadcasting networks and fixed broadband. As a result, most operators will not be able to invest sufficient amounts quickly enough on their own to exploit 3G’s full potential.”

Key findings from the new report include:

• Recent announcements of network sharing agreements between major network operators, such as T-Mobile and 3 in the UK (in December 2007), indicate a change in attitude towards network sharing.
• Network sharing can have considerable cost benefits. For example, a network operator that aims to extend its 3G network to 13 000 sites can save USD1 billion in capital expense (by reducing the need for new base station equipment and sites) and USD1 billion in operational expense (by sharing the cost of operating sites) over ten years by sharing 3G networks. 2G network sharing could provide even greater cost savings.
• Network sharing can take different forms. At one extreme, two mobile operators might share physical resources, such as sites and masts, but not network equipment. At the other extreme, all mobile operators in a country could share the same radio access and core networks. Different forms of network sharing will present different challenges. Sharing of radio access networks will be the most common approach.

“3G network coverage must be at least as good as 2G network coverage if mobile users are to be encouraged to migrate to 3G services, as operators’ experience in Japan has demonstrated. Most 3G networks are nowhere near this,” says Dr Mark Heath. “Network sharing provides mobile operators with the means to accelerate 3G coverage roll-out dramatically. It has taken the UK operator 3 about four years to increase its number of 3G base stations from about 5000 to 7500, but its network sharing agreement with T-Mobile will enable it to increase this number to 13 000 within two years.”

3G Infrastructure Sharing: the future for mobile networks reviews a range of network sharing arrangements, from site sharing through to complete network sharing. It evaluates the potential cost savings and assesses the other benefits.

“Mobile equipment vendors may be depending on 3G enhancements such as Long Term Evolution (LTE) to secure the future of their businesses, by enabling mobile operators to offer network-intensive services such as broadband services to the home and mobile TV services,” said Dr Alastair Brydon, co-author of the reports. “However, our modelling shows that LTE may not be necessary at all.”

The lack of a compelling business case for 3G network enhancements, combined with an increase in network sharing, will have a profound impact on the cellular network infrastructure market.

Key findings from the new reports include the following:

• Mobile operators may not need the capacity gains offered by LTE, because mobile services will increasingly be delivered using alternative technologies, such as femtocells and broadcasting networks.
• LTE will not be widely available before 2010, which is too late to play a significant role in the provision of broadband services to homes and businesses, because of the widespread availability of low-cost DSL and cable services.
• T-Mobile and 3 in the UK announced in December 2007 that they had entered into a network sharing agreement. This announcement is indicative of a trend that is set to spread as operators struggle to expand 3G coverage and make funds available for alternative investments.

“3G network evolution is about to change course”, says Dr Mark Heath. “With doubts about the viability of LTE, the move towards network sharing couldn’t come at a worse time for network infrastructure vendors. It is imperative that vendors increase market share to compensate for the future consolidation of 3G networks.”

3G Network Evolution from 2007 to 2012 examines the evolution of 3G networks in order to identify realistic timescales for, and the capabilities of, 3G enhancements. The report also defines the most effective deployment strategies for mobile operators. It considers key 3G enhancements, including HSUPA, HSPA+, LTE and femtocells, quantifying the services and customer usage profiles that can realistically be supported. The complementary report 3G Infrastructure Sharing considers the strategic impact of extensive network sharing on mobile operators, equipment vendors, regulators and other market players.

“Femtocells are progressing rapidly from being an interesting emerging technology to being ready for mobile operators to deploy,” says report co-author, Dr Alastair Brydon. “Engineering departments within mobile operators have generally led the evaluation of femtocells but the next critical step is to define a profitable business case, based on clearly targeted and compelling customer propositions.”

Key findings from the new report include:

• A number of service and customer scenarios in which operators propose to use femtocells do not make sound commercial sense and may cannibalise existing ARPU.
• Widespread use of femtocells solely to provide low-priced voice telephony in the home, although stimulating fixed-mobile substitution, could lead to disaster, as the revenue benefits are highly uncertain. Mobile operators that focus on voice telephony must target key market segments and resist very low pricing. For example, in a multi-person household with poor existing cellular coverage, operators can recoup the cost of femtocells within four months, provided a significant price premium is maintained over fixed calls.
• A strategy underpinned by a range of multimedia service propositions will result in a much stronger business case for femtocells, bringing the potential to increase revenue and save substantial costs, and offering operators the chance to recoup their investment within one to eight months, depending upon the scenario modelled. Applications such as mobile TV, video and audio services will significantly broaden the consumer appeal of femtocells.

“Mobile TV could be a critical component of a successful femtocell business case, providing substantial cost savings as well as revenue enhancement,” says co-author Dr Mark Heath. “Trials have shown heavy usage of mobile TV at home, and mobile operators could save USD10 per household per year by avoiding the need to build dense DVB-H networks in order to provide mobile TV services indoors.”

Femtocells in the Consumer Market: business case and marketing plan shows mobile operators how to define compelling consumer propositions (voice and non-voice) aimed at key market segments to profitably derive revenue from femtocells. The report quantifies the business case for deployment of femtocells for a range of customer types and service mixes in order to pinpoint the most attractive opportunities. The report also compares the business case for femtocells with a number of other options, including network sharing, UMA services, home-zone tariffs and traditional bundles, and defines exactly where, how and when femtocells should be deployed to achieve the best return.

“A small number of MNOs are already using 2G picocells to target businesses with indoor cellular voice services,” according to the report’s co-author Dr Mark Heath. “For example, Spring Mobil in Sweden focuses entirely on the enterprise market, using picocells to deliver high-quality indoor coverage. The operator has acquired 30 000 users in 600 corporate customers.” Currently, expensive backhaul transmission from the business to the MNO limits the opportunities for cost-effectively installing picocells in more organisations. cost-effectively installing picocells in more organisations.

Heath says, “Femtocells can operate using much cheaper transmission solutions than picocells. This will enable MNOs to address much smaller sites, such as SOHOs and remote offices of corporate organisations.”

Key findings from the report include:

• A typical indoor coverage solution, using picocells and E1 transmission, requires at least 30 users within the picocell coverage area to be cost-effective for an MNO. If the MNO is unable to increase revenue substantially, then many more users may be required.
• The cost of transmission is the limiting factor in the business case for picocells. MNOs need to find cheaper alternatives, such as DSL and transmission sharing.
• 3G femtocells can operate using cheap transmission solutions, such as DSL and have greater potential to support non-voice services than 2G picocells.

“Femtocells and picocells will be important in helping MNOs to respond to the threat of dual-mode cellular-WLAN services in the business sector,” according to report co-author Dr Alastair Brydon. “MNOs can offer services that replicate the benefits of dual-mode handset solutions, using standard cellular handsets, and provide seamless working between the indoor and outdoor cellular networks.”

The Business Case for Picocells and Femtocells in the Enterprise Market assesses the business case for the deployment of indoor base stations in the enterprise market, evaluating a number of scenarios, and reviewing early picocell service implementations.

A number of operators have already launched dual-mode UMA services, and on Friday 28 September 2007 TeliaSonera launched its Home Free service in Sweden.

“Many people regard FMC as being dual-mode handset services that use WLAN for voice communication in the home and workplace, while using cellular services elsewhere,” says report co-author, Dr Alastair Brydon.

“Early take-up of such services has been disappointing. For example, nearly two years after its launch, there were only 40 000 BT Fusion customers, representing just 0.2% of the number of BT fixed telephony customers. There may be much better alternatives than dual-mode handsets if operators want to deliver successful FMC services.”

Key findings from the report include:

• Device convergence – where operators offer dual-mode mobile devices that can access both fixed and mobile network services – is only one form of FMC. Early consumer UMA services lack simplicity, face strong competition and fail to target receptive market segments. BT is not alone in experiencing disappointing take-up. Deutsche Telekom launched its T-One dual-mode service in Germany in August 2006, but the service had attracted less than 10 000 customers by March 2007.
• A number of developments to UMA-based voice services – such as an improved range of handsets during 2007 – will enhance their attractiveness. However, these advances will be countered by improvements in cellular-only services, which will become more affordable, for example.
• Operators must not overlook the more significant opportunities presented by market convergence. This involves operators combining the marketing of fixed and mobile services – for example, with bundled pricing, special promotion and/or utilising common distribution channels – without necessarily delivering the services to a single device or using a common integrated network.

“Innovative converged marketing of fixed and mobile services can result in propositions that are much more appealing to end users than completely separate services,” says co-author Dr Mark Heath.

“Marketing convergence can also avoid non-integrated operators being disadvantaged compared to integrated operators by their more limited opportunities with device and network convergence.”

This report examines the reality of FMC, its impact so far and likely future developments. It covers a broad range of FMC initiatives, including device convergence (for example, UMA and SIP), network convergence (to an integrated IP network) and marketing convergence (for example, integrated pricing plans and distribution). It identifies pragmatic steps that operators can take in order to achieve significant benefits from FMC and avoid major implementation hurdles.

Some mobile operators have considered offering a complete set of fixed and mobile services using wireless technologies (such as HSDPA and WiMAX), but operators will need both fixed and mobile networks in order to deliver a comprehensive range of services to end users, says Mark Heath, co-author of the report How to Succeed with Fixed-Mobile Convergence.

“Fixed broadband services could generate revenue for mobile operators, at a time when mobile voice ARPU (Average Revenue Per User) is declining and it continues to be difficult to achieve substantial growth in non-voice revenues,” Heath argues.

“Bundling fixed broadband with existing mobile services is an immediate opportunity for new revenue and, in addition, can be an effective means of retaining existing customers. Furthermore, the importance of fixed network access for mobile operators will increase as they start to deploy femtocells (or indoor base stations), which depend on broadband connections for backhaul to their mobile networks.”

Vodafone offers DSL services through wholesale agreements with Arcor in Germany, and BT in the UK. Following Vodafone’s latest acquisition, it can now offer fixed broadband services alongside its traditional mobile services in four of its major European markets.

“It is highly likely that other mobile-only operators will acquire fixed network assets, or establish partnerships or agreements, with fixed operators. However, mobile-only operators that have begun to negotiate partnerships or agreements with fixed operators may need to consider more radical action in order to achieve service profitability,” says Heath.

“Broadband services may provide a much-needed revenue boost, but operators must not lose sight of the need to achieve and maintain service profitability in the longer term. Mobile services can offer significant profit margins, but the margins for fixed broadband services may be small. Mobile-only operators that have wholesale agreements with fixed operators, may be unable to offer low-priced fixed broadband services without damaging profitability. Such operators will need to consider alternatives, such as the acquisition of fixed operators or local loop unbundling,” he concludes.

“In many markets it looks as if fixed voice is going to suffer not the slow and lingering decline many have predicted, but a rather rapid one,” says report co-author, Dr Alastair Brydon. “At the current rate of traffic migration, 90% of all voice minutes in Finland will originate on mobile phones by 2008.”

Key findings from the new report include:

• In five Western European markets, more voice minutes originate on mobile networks than on traditional voice and broadband networks combined.
• VoIP appears to have little impact on the migration of voice traffic to mobile networks. Paradoxically, it appears to release consumer cash for additional spending on mobile services.
• Finland had the highest level of fixed-mobile traffic substitution in Western Europe in the fourth quarter of 2005 – mobile-originated calls accounted for 64.6% of voice traffic. However, the country also experienced the greatest increase in this proportion during 2006, by 10 percentage points, to reach 74.6% in the fourth quarter of 2006.
• Traffic substitution is also progressing rapidly in markets that have previously undergone little FMS. Germany has experienced much less traffic substitution than the Western European average; only 17.5% of its voice traffic originated on mobile phones in the fourth quarter of 2005. However, this proportion increased by 6.8 percentage points – one of the highest increases in Western Europe – to reach 24.3% in the fourth quarter of 2006.

“The widespread introduction of home-zone tariffs in Germany is having a significant effect, which demostrates that mobile operators’ actions can significantly increase usage,” says co-author Dr Mark Heath. “Following years of usage stagnation, average outgoing mobile voice usage per subscriber increased by 23% during 2006.”

“What is particularly worrying for fixed-line operations is not that FMS is happening, but the pace at which it is happening,” adds Rupert Wood, principal analyst at Analysys Mason. “Of course, fixed-network operators are looking to different sources of revenue for growth, but the accelerating decline in core voice revenue is damaging at a time when they are embarking on long and expensive next-generation network re-engineering programmes.”

Enterprises account for a large proportion of total mobile service revenue, their share reaching 37% in Western Europe and 39% in the USA in 2006. However, mobile operators put most of their effort into the mass market, where they can sell the same set of services to a very large number of consumers. “Neglecting the enterprise market is a risky strategy”, says report co-author, Dr Alastair Brydon. “Mobile operators in developed markets are finding it increasingly difficult to boost their revenues from consumer services, despite the advent of 3G services and handsets. Furthermore, in the absence of comprehensive enterprise mobility solutions from the cellular industry, the IT community is exploiting the increasing adoption of WLAN, particularly in North America. This threatens to cannibalise cellular revenue.”

Key findings from the new report include:

• Mobile services and applications can bring major benefits to enterprises, including cost savings, productivity gains and strategic advantages. However, the take-up of enterprise mobility solutions is still relatively restricted, being limited to, for example, senior executives and mobile workers that are critically dependent on mobile communications.
• A battle to seize control of critical parts of the enterprise mobility market has developed between cellular and WLAN communities.
• A number of technological breakthroughs – such as indoor base stations (picocells and femtocells) and IP Multimedia Subsystem (IMS) – will enable mobile operators to substantially improve their enterprise mobility solutions.

This report assesses the current state of enterprise mobility, revealing that today’s solutions do not meet all the needs of the enterprise community, and considers the threat of mobile operators being marginalised by new competitors. It provides a thorough review of enterprises’ challenging requirements and identifies the issues that mobile operators need to address. The report also illustrates how a number of important developments, including indoor base stations and IMS, will add essential capabilities to cellular networks, if mobile operators shape their development appropriately.

“There is increasing uncertainty about the future of voice and non-voice services, the technologies that will be deployed and the extent to which growth will shift from developed to developing markets,” says co-author Dr Alastair Brydon. “These uncertainties could lead to radically different outcomes for mobile operators and equipment vendors.”

Unwired Insight has defined three plausible scenarios for the evolution of the wireless industry during the next five years: “Emerging Markets Thrive”, “Cellular Goes Indoors” and “Low-cost Data Pipes” In the “Emerging Markets Thrive” scenario, mobile penetration saturation, intense price competition for voice telephony and widespread failure to achieve robust non-voice revenue growth leads to significant consolidation in developed markets. Mobile operators embark on aggressive cost reduction initiatives, such as network sharing, and avoid significant further investment to maintain profitability levels. Operators, handset and infrastructure vendors and investors focus on growth opportunities in developing countries, for voice telephony and mobile Internet services.

“We are already seeing early signs of this scenario,” says Dr Mark Heath, co-author of the report. “Despite a 23% increase in voice usage per capita, the high level of fixed-mobile substitution in Finland has not increased ARPU. Furthermore, many mobile operators are finding it difficult to achieve non-voice ARPU of more than USD8 per month. By contrast, Nokia sold almost twice as many handsets in developing countries as it sold in Europe and North America combined in the first quarter of 2007.”

This report examines a number of key trends within the wireless industry and assesses their potential effects by defining and evaluating three plausible scenarios for the industry’s evolution. The report identifies actions for mobile operators, and handset and infrastructure vendors.

Unwired Insight has defined three plausible scenarios for the evolution of the wireless industry during the next five years: “Low-cost Data Pipes”, “Emerging Markets Thrive” and “Cellular Goes Indoors”.

“It is dangerous to define a business strategy and plan based on a single view of the future because of the high level of uncertainty in the wireless industry,” according to report co-author, Dr Mark Heath.

“Organisations need to define a robust strategy and test their business assumptions against different industry evolution paths, such as the three depicted in our scenarios.”

In the “Cellular Goes Indoors” scenario, the industry focus changes quickly from the provision of outdoor mobile services to indoor services. Mobile operators respond to subscribers’ increasing expectations for indoor coverage by deploying millions of indoor base stations. This enables them to achieve growth in ARPU through increased use of mobile voice telephony and non-voice services such as mobile TV and fixed broadband.

“Fixed broadband and cellular technologies will fulfil complementary roles within homes and offices,” according to co-author Dr Alastair Brydon.

“This will drive mobile operators to diversify their operations to include fixed as well as mobile services. Furthermore, mobile operators will be forced to invest heavily in the provision of indoor cellular coverage.”

“Increasing usage of mobile voice and data services indoors suggests that indoor services are set to become a key area of competition for the wireless industry,” according to Mark Heath.

“Despite poor in-building coverage, the number of mobile users that make cellular calls at home is increasing. By 2006, more than 70% of all voice traffic in Finland originated on a mobile phone. In addition, early trials have shown that homes and offices are the two most popular locations for using mobile TV services.”

“There is increasing uncertainty over the future of the wireless industry, and it could evolve in radically different ways,” says co-author Dr Mark Heath.

“Organisations need to generate robust plans to steer the industry in their preferred direction, and to ensure success regardless of how the market develops.”

Unwired Insight has defined three plausible scenarios for the evolution of the wireless industry during the next five years: “Low­cost Data Pipes”, “Emerging Markets Thrive” and “Cellular Goes Indoors”. In the “Low-cost Data Pipes” scenario, wireless data becomes a commodity as a result of the widespread introduction of low-cost, unlimited-usage mobile data packages and the deployment of WiMAX networks. Mobile networks become transparent data pipes, in much the same way as fixed networks, and mobile operators lose control of (and the revenue from) the services that are carried across their networks. Mobile operators have to focus on reducing cellular network costs substantially so that they can deliver high volumes of data traffic profitably.

“We are already seeing early signs of this scenario,” says Dr Alastair Brydon, co-author of the report. “The number of relatively inexpensive, uncapped-usage data tariffs from mobile operators is increasing. For example, T-Mobile UK’s web’n'walk Plus service offers 3GB of Internet access for only GBP29 (USD55) per month, which equates to USD0.02 revenue per megabyte. Furthermore, some operators are allowing unlimited Skype voice calling, which enables mobile users to bypass conventional mobile operator voice services.”

This report examines a number of key trends within the wireless industry and assesses their potential effects by defining and evaluating three plausible scenarios for the industry’s evolution. The report identifies actions for mobile operators, and handset and infrastructure vendors.

“With falling voice ARPUs, mobile operators now need to drive non-voice services”, says co-author Dr Alastair Brydon. “From a vast array of wireless services, we’ve identified the ten best non-voice services in the world, picking out those exhibiting high market potential, effective implementation and suitability for reproduction on other markets.”

The world’s top ten non-voice services are:

• Vodafone’s Casa FASTWEB DSL service (Italy)
• O2′s SMS service (UK)
• 3′s 3G mobile TV and video streaming service (UK)
• T-Mobile’s BlackBerry email and instant messaging service (USA)
• Sprint Nextel’s CDMA2000 EV-DO Revision A mobile broadband service (USA)
• 3′s DVB-H mobile TV broadcasting service (Italy)
• KDDI au’s EZ Chaku-uta Full music downloading service (Japan)
• SK Telecom’s Cyworld Mobile community portal service (South Korea)
• NTT DoCoMo’s DCMX mobile credit service (Japan)
• Vodafone’s MiniCall ‘voice SMS’ service (Egypt)

“The top service may be a surprise to some”, says Dr Mark Heath, co-author of the report. “However, DSL services can generate average monthly revenue of at least four times current non-voice ARPU levels. All of our top ten have great potential to drive operator ARPU.”

This new report identifies the top ten services from a large number of non-voice services worldwide, and provides detailed case studies and analysis of these leading services to help others replicate their success. The report provides unique guidance to mobile operators (as well as MVNOs and third party service providers) on the best opportunities to increase their non-voice service revenues.

“The indoor base station concept has emerged rapidly and has created extensive speculation about its potentially wide-reaching consequences,” says co-author Dr Alastair Brydon. “A number of technologies have been over-hyped in recent years, but femtocells have the potential to transform the telecoms industry. The trend towards fixed-mobile substitution is increasing in many countries, and 3G networks are at a relatively early stage in their development. In this context, 3G femtocells could not have arrived at a better time for the mobile industry.”

The report draws on interviews from a range of indoor base station experts and vendors in Europe and the USA and describes how indoor base stations may be used across different wireless technologies, assesses the business case for their application and identifies the issues that need to be resolved to enable widespread deployment.

Key findings include:

• Indoor base stations can be applied to a number of wireless technologies, including 2G, 3G, 3G LTE, WiMAX and WiBro, but 3G femtocells present the greatest opportunity.
• There is a compelling business case for mobile operators to deploy femtocells, based on ARPU growth, cost savings and churn reduction. Indoor base stations can provide a less expensive alternative to traditional outdoor cellular infrastructure for providing in building coverage.
• Femtocells will accelerate the migration of voice traffic from fixed to mobile networks, until 3G networks carry the majority of voice traffic. Femtocells will undermine the case for converged cellular-WLAN services (for example, based on UMA) by enabling very similar tariffs without the need for dedicated handsets.

“The potential of femtocells is substantial for mobile operators, but critical implementation and performance issues need to be resolved before they can be deployed widely,” according to Dr Mark Heath, co-author of the report. “These include interference, range, performance, network integration and management, handover, billing and security.”

“3G network in-building coverage is significantly worse than that of 2G for most mobile operators worldwide,” according to report co-author Dr Alastair Brydon. “As the number of mobile users that make calls within their homes increases, operators could be forced to make substantial further investment in their macrocell networks to improve 3G coverage. However, deployment of millions of femtocells could provide a much less expensive alternative.”

Key findings of the report include:

• Operators may have to increase the number of outdoor base stations in their networks dramatically – by a factor of two or more, in some cases – as demand for in-building coverage increases. For example, operators in Japan launched 3G services early, but are still making substantial further investments in coverage enhancement.
• Widespread 3G femtocell deployment could avoid the need for substantial numbers of additional macrocells, by providing a targeted means of enhancing in-building coverage for customers that need or want it. An operator with 5 million customers could save an average of about USD45 per customer per year by 2012 by deploying 3G femtocells in 60% of customer households.
• Mobile operators that decide to deploy indoor base stations must adopt a large-scale approach. If most of their customers do not take up femtocells, mobile operators will still need to invest heavily in their macrocell networks. Operators with 5 million customers would save only about USD20 per customer per year by 2012 by deploying 3G femtocells in 20% of households.

“Cost savings represent only one part of a compelling business case for the widespread deployment of femtocells,” according to Dr Mark Heath, co-author of the report. “3G femtocells improve opportunities to generate additional voice revenue from fixed-mobile substitution, group tariffs, mobile data services and DSL.”

This new report describes how indoor base stations may be used across different wireless technologies, assesses the business case for their application and identifies the issues that need to be resolved to enable widespread deployment. It also assesses the strategic impact of home base stations on the telecoms industry, including fundamental changes to network evolution. The report draws on interviews from a range of indoor base station experts and vendors in Europe and the USA.

“Some fixed-only and integrated network operators are offering converged fixed and mobile services, such as the UMA-based BT Fusion service in the UK, as a means of reversing fixed-mobile substitution,” says Dr Alastair Brydon, co-author of the report, Picocells and Femtocells: will indoor base stations transform the telecoms industry?

“However, a major disadvantage of these services is the need for dedicated handsets. With femtocells, operators can offer similar tariffs with standard cellular handsets,” says Brydon.

Key findings of the report include:

• Converged cellular/WLAN services can provide customers with inexpensive calls on mobile handsets while in the home or workplace, with the benefits of wide-area mobility and traditional cellular calls on the same handset elsewhere. However, the variety of UMA handsets available is not as wide as that of standard handsets, and they may be more expensive and less attractive.
• Femtocells are residential indoor base stations that aim to provide satisfactory cellular coverage in a typical home. The widespread introduction of 3G femtocells would allow mobile operators to offer tariffs that are very similar to those of UMA-based services, while maintaining significant price premiums for calls made outside the home. Furthermore, mobile users would not need to replace their 3G handsets.
• There is a compelling business case for mobile operators that adopt a large-scale approach to 3G femtocell deployment. In addition to revenue opportunities from displacing fixed traffic in the home, 3G femtocells can provide a more cost-effective means of improving in-building coverage than macrocellular network enhancement, and can reduce churn.

“Femtocells will not require dedicated handsets, but significant investment will be required to deploy potentially millions of femtocells per operator,” says Dr Mark Heath, co-author of the report. “However, these costs will decline substantially, and mobile users might be willing to contribute towards the costs in return for less-expensive calls and improved coverage.”

“DSL services can generate nine times the ARPU earned by many mobile operators today from mobile data services. However, the challenge is to offer such services profitably,” says Dr Mark Heath, co-author of the report, Mobile Operator Strategies for Fixed Broadband.

“If 10% of its customers subscribed to DSL services, a large mobile operator with could achieve a 16% cost saving in the provision of DSL services by investing in its own LLUB network, ” adds Heath.

Other key findings of the report include:

• There is a strong case for mobile operators bundling fixed broadband with their traditional mobile services. However, as investors increasingly focus on bottom-line performance as well as on revenue, operators must ensure that broadband services do not damage their profitability. With the wrong implementation choice, margins could be wafer thin.
• While wireless technologies, such as HSPA, CDMA2000 1x EV-DO Revision A and WiMAX, have been touted as viable ways for mobile operators to offer fixed broadband services, DSL is the most appropriate choice for the short term in developed countries. HSPA could not profitably support average monthly usage levels of 2GB or more per customer.
• While some operators, such as Vodafone UK, have chosen to resell the DSL services of the incumbent fixed operator (BT), local loop unbundling can achieve greater profitability.

“If fixed broadband services are to be profitable and to make a noticeable difference to mobile operators’ revenue, a typical mobile operator must encourage at least 10% of its customer base to subscribe to its DSL services,” says Dr Alastair Brydon, co-author of the report. “While there are risks involved, investment in LLUB could pay back in less than three years.”

The report assesses the advantages of offering fixed broadband services and the impact of the services on revenue and profitability. It evaluates the delivery options available to mobile operators, including 3G, 3G LTE, cable, DSL and WiMAX. The report considers DSL resale, bitstream access, LLUB and acquisition of existing ISPs, illustrated by a range of case studies, and identifies the best approaches for different types of mobile operators.

Key findings from the new report include:

• Wireless technologies (such as 3G, WiMAX and, in the longer term, 3G LTE) can bring Internet services to the home but, in the short term, DSL is the most effective way of delivering fixed broadband services, even though use of DSL means mobile operators must move outside their core businesses.
• Operators can implement DSL services in various ways, including resale, bitstream access and local loop unbundling (LLUB), and economic analysis reveals significant differences in cost between implementation options. While they focus on revenue growth, mobile operators must ensure that broadband services do not damage profitability.
• LLUB can be significantly more profitable than other DSL solutions – costs can be about 30% lower than those of bitstream access – if operators can achieve significant broadband penetration, although LLUB entails greater investment and risk.

“With their established brands and large existing customer bases, mobile operators have the potential to achieve strong take-up of broadband services”, according to Dr Alastair Brydon, co-author of the report. “However, to make any significant difference to their businesses, they need to think big and act quickly in what in many countries is a rapidly maturing market.”

The report assesses the advantages of offering fixed broadband services and the impact of the services on revenue and profitability. It evaluates the delivery options available to mobile operators, including 3G, 3G LTE, cable, DSL and WiMAX. The report considers DSL resale, bitstream access, LLUB and acquisition of existing ISPs, illustrated by a range of case studies, and identifies the best approaches for different types of mobile operators.

“FMS is generally seen as a threat for fixed operators and an opportunity for mobile operators. However, while fixed operators’ voice call revenue is falling substantially due to FMS, not all mobile operators are seeing revenue gains as a result,” says Dr Alastair Brydon, co-author of the report. “To avoid declines in voice ARPU, mobile operators need to achieve significant increases in usage to compensate for price cuts, and some operators are doing much better than others.”

Key findings from the report include:

• Fixed-mobile substitution is accelerating. If this increasing pace continues, 50% of all voice traffic will originate on mobile phones by 2008 in Western Europe. In principle, this should be good for mobile operators.
• Mobile operators must be wary of using price cuts as the primary means of encouraging FMS. Drastic cuts in mobile pricing can destroy the potential benefits of FMS for mobile operators. Mobile operators in Finland and Portugal have achieved significantly higher levels of FMS than in other countries but have sacrificed revenue to do so. In Finland the proportion of voice traffic originating on mobile phones rose from 55% in 2004 to 70% in 2006. The average spend per mobile minute dropped by 34% to EUR0.10, but mobile usage per capita increased by only 23%, resulting in a net fall in ARPU.
• Mobile operators must be smarter in designing their tariffs and avoid sacrificing the price premium of mobile voice over fixed voice. In Austria, France and Spain, operators have succeeded in capturing a large proportion of voice traffic without substantial price cuts. In Spain operators were able to achieve a 58% increase in mobile voice usage per capita in the period 2004-6, with a decline in voice spend per minute of only 7%.

“Home-zone pricing (low prices for calls made in the home but substantially higher prices for calls made elsewhere) has been successful in Germany, where the price premium of mobile over fixed was 351% in 2006,” says Dr Mark Heath, co-author of the report. “Eventually, the widespread introduction of femtocells will allow mobile operators to offer smart tariffs, while also boosting the quality of in-building coverage.”

Fixed-Mobile Substitution in Western Europe: causes and effects quantifies the true scale of FMS in Western Europe, in terms of fixed-line substitution and the migration of voice minutes from fixed to mobile networks. The report considers a wide range of key metrics, such as the proportion of households that are mobile-only; the proportion of voice traffic originating on a mobile network; voice usage per capita; voice spend per capita; fixed and mobile voice spend per minute; and the price premium of mobile voice over fixed voice. The report assesses how these metrics have changed over a two-year period, to provide insight into the rate of FMS and its effects.

“Users are increasingly opting for the convenience and personalisation of mobile phones, even when a cheaper fixed phone is available,” says Dr Alastair Brydon, co-author of the report. “Despite falling fixed and mobile prices, overall spend on voice services is holding up well, as mobile users choose to make more expensive mobile calls instead of fixed calls.”

Key findings of the report include:

• Fixed-mobile substitution (FMS) is accelerating and could result in more than half of all voice traffic in Western Europe originating on mobile phones by the end of 2008. Mobile voice usage already far exceeds that level Austria, Finland and Portugal.
• The extent of FMS varies widely between countries. The percentage of households that are mobile-only in Finland is five times greater than in Sweden. In early 2006 the proportion of total voice minutes that originated on mobile networks ranged from 18% to 70% across Western Europe.
• The growing use of mobile phones has helped to increase overall voice traffic and maintain the level of spend on voice services in Western Europe.

“Our analysis shows definitively that the affordability of mobile voice calls is the key factor in the level of FMS in a particular country,”explains co-author Dr Mark Heath. “Once mobile pricing becomes affordable, there is little that fixed operators can do to halt traffic migration. However, some mobile operators have damaged their revenue by cutting prices too much. Very low pricing is not necessary and mobile operators can achieve significant traffic migration even with a healthy price premium over fixed services.”

The report quantifies the true scale of FMS in Western Europe, in terms of fixed-line substitution and the migration of voice minutes from fixed to mobile networks. The report considers a wide range of key metrics, such as the proportion of households that are mobile-only; the proportion of voice traffic originating on a mobile network; voice usage per capita; voice spend per capita; fixed and mobile voice spend per minute; and the price premium of mobile voice over fixed voice. The report assesses how these metrics have changed over a two-year period, to provide insight into the rate of FMS and its effects.

“By enabling customers to keep their mobile numbers when they change networks, MNP is a fundamental prerequisite of open competition and choice,” according to Dr Mark Heath, co-author of the report. “However, regulators and operators need to make substantial improvements to current MNP solutions if they want them to be of any significant benefit.”

Key findings of the report include:

• MNP has been in place for several years in many countries, yet despite the high level of churn in the mobile industry there are few examples where more than 10% of mobile numbers have been ported
• Many MNP solutions have significant barriers to customer take-up, such as high charges for porting a number, long delays before porting takes place, limitations to data services after number porting, and sheer lack of awareness that MNP is available
• Contrary to popular belief, MNP does not necessarily increase long-term churn or cause price competition. MNP can be a major benefit to mobile operators if implemented well and some have achieved significant market share growth by embracing it.

“One of the biggest barriers to MNP is that customers do not realise it is available” according to co-author Alastair Brydon. “Even with the best technical solutions and processes in place, if regulators and operators do not publicise it then it will fail.”

The report evaluates the impact of MNP on the mobile industry so far, for example in terms of churn and pricing. It demonstrates that the full benefits of MNP come only when it is implemented effectively and taken up by a substantial proportion of churning customers. Using a variety of case studies to illustrate best practice, the report defines the actions that regulators must take to achieve success with MNP, and the actions that mobile operators can take in order to fully benefit from MNP.

The new report assesses the performance of mobile operators worldwide against the key metrics that will determine their success and survival.

Key findings of the report include:

• Non-voice ARPU is flat for the majority of mobile operators in developed markets, with very few operators outside Japan breaking through the USD10 per month barrier.
• Voice ARPU is declining for nearly all mobile operators, although a small number have managed to reverse the trend.
• Annual churn levels vary widely around the world, from less than 10% to over 50%.

“Despite some disappointing findings, the best-in-class operators are demonstrating the way forward,” according to co-author Alastair Brydon. “O2 UK has increased non-voice ARPU by 19% per annum, to USD12 per month, by stimulating the usage of SMS in a number of ways, without sacrificing its price. 3 UK has leap-frogged over Japanese operators, to achieve the highest non-voice ARPU levels in the world, by exploiting the capabilities of its 3G network to offer a host of innovative 3G services, such as mobile TV, music downloads and user-generated content.”

This report benchmarks a wide variety of operators around the world against critical measures, including voice and non-voice ARPU, churn and the ability to offer fixed and converged services. As well as considering the performance of operators in individual countries, it considers the quality of multinational operators’ global portfolios. The report identifies best-in-class performers and explains how they have achieved success, defining clear actions that all operators can take to improve their performance.

According to the report’s co-author, Alastair Brydon, “WiMAX operators and investors will have to select their targets with extreme care. Small returns in many situations, from low ARPU or take-up, make high up-front investments in network infrastructure, marketing and customer premises equipment (CPE) highly risky.”

Key findings from the new report include:

• Although emerging countries have low penetration of fixed network infrastructure and services, the business case for WiMAX will still be difficult. Low disposable incomes, low penetration of PCs and the growing strength of cellular services will limit the return.
• In principle, there is an opportunity to make a healthy profit from WiMAX in rural areas of developed markets, unserved by DSL or cable services. However, with fixed operators rapidly extending the reach of DSL, these opportunities are likely to be few in number and limited in size.
• Head-to-head competition with fixed broadband services in developed markets would require a spectacular performance by a WiMAX operator to overcome the growing capabilities and services on offer, such as IPTV. WiMAX would encounter fierce competition from DSL services offered by a wide array of major consumer brands using their own networks, wholesale services and local loop unbundling (LLUB).

“Developing markets are often cited as the prime opportunity for WiMAX networks, but voice telephony will be important to end users in these markets and cellular services have already gained a strong foothold, fuelled by the availability of cheap handsets, according to report co-author, Mark Heath. “Furthermore, WiMAX businesses in rural areas of developed markets will face serious difficulty if DSL subsequently becomes available.”

This report models the business case for WiMAX in a number of potential deployment scenarios, including a developing market urban area, a developed market urban area and a developed market rural town. It identifies the critical factors that will make or break the business case for WiMAX in these environments, illustrated by a variety of case studies and market data.