Press release: Mobile operators could recoup investment in unbundled DSL within three years

The provision of fixed broadband is becoming essential for mobile operators and they could quickly recoup the substantial investment necessary to offer their own unbundled DSL services if they achieved strong service uptake, says Unwired Insight.

"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.