Posts Tagged ‘mobile broadband’
Mobile broadband slows fixed broadband penetration growth in Europe
As fixed broadband heads towards market saturation in Europe, mobile broadband services are continuing to ‘steam ahead’ in some countries. The rapid take-up of mobile broadband services is slowing the growth in fixed broadband penetration. For the second year in a row, Finland has experienced a decline in fixed broadband penetration.
Across Europe as a whole, growth in the take-up of fixed broadband services has been slowing, as fixed broadband nears market saturation. According to the European Commission, the overall fixed broadband penetration rate (as a proportion of the population) increased by only 1.7 percentage points in 2010 – the slowest growth rate since 2002 – to reach 26.6%.
While this fixed broadband penetration rate may appear relatively low, it must be remembered that it relates to overall population and not the percentage of households using a fixed broadband connection (which is substantially higher at 60.8%). In Sweden, Denmark and Finland, the percentages of households using a broadband connection were 82.6%, 80.1% and 75.8%, respectively at the end of 2010. As fixed broadband saturation nears, some fixed network operators are wisely looking to superfast broadband services as a means to increase fixed revenues as well as to resist any substitution of their services by mobile broadband services.
Compared with fixed broadband services, it is still relatively early days for mobile broadband. Average penetration of mobile broadband dongles and datacards reached 7.2% across EU countries in January 2011. Mobile broadband services have strong potential for further growth in many countries, particularly where operators provide affordable pricing, extensive coverage and high quality of service.
In 2010, the average penetration rate of mobile broadband dongles and datacards increased by 2.0 percentage points. It is dangerous to draw too many conclusions from this average figure, as it masks substantial differences between countries. For example, the penetration rate of mobile broadband dongles and datacards in Finland, Hungary, Poland and Sweden increased by 13.6, 5.0, 4.8 and 4.5 percentage points. In sharp contrast, the increases in the UK, Germany and France were significantly below the EU average. In part, this is due to operator actions to avoid network congestion problems, such as reducing monthly data allowances, combined with a failure to address quality of service and coverage issues.
As shown in the figure, below, mobile broadband penetration exceeded 10% in seven countries in January 2011: Finland, Austria, Sweden, Denmark, Ireland, Portugal and Italy. In Finland, mobile broadband penetration (as a proportion of the population) has now overtaken fixed broadband penetration (as a proportion of the population), and Austria is not far behind.
Fixed broadband penetration and mobile broadband penetration for EU countries, January 2011
Analysis of the EU fixed broadband and mobile broadband penetration data reveals that the growth in fixed broadband penetration has slowed in markets that have experienced strong growth in mobile broadband penetration, as shown in the figure below. The figure shows a plot of the two-year increase (from January 2009 to January 2011) in fixed broadband penetration against the corresponding two-year increase in the penetration of mobile broadband dongles and datacards, for a range of EU countries. There is a clear negative correlation. Markets that have experienced strong growth in mobile broadband penetration – noticeably Finland, Sweden and Denmark, have experienced low (or, in the case of Finland, negative) growth in fixed broadband penetration.
In his previous article, Alastair Brydon reported that Finland experienced a decline in fixed broadband penetration of 1.3 percentage points, from 30.7% at the end of 2008 to 29.4% at the end of 2009. In the year to January 2011, Finland experienced a further decline – of 0.3 percentage points – in fixed broadband penetration, to reach 29.1%.
Two-year increase in fixed broadband penetration plotted against two-year increase in mobile broadband penetration
So, it is clear that, to a certain extent, fixed broadband services are being substituted by mobile broadband services, and this effect is most pronounced where mobile broadband services are affordable and of high quality, and where coverage is extensive. The combination of extensive deployment of LTE networks and further improvements in tariffs (enhanced affordability with higher usage allowances) may encourage further substitution of fixed broadband services in some countries over the next few years.
The fact that several markets have managed to achieve high penetrations of both fixed and mobile broadband services suggests that most users regard mobile broadband services as complements to fixed broadband services. For example, despite Denmark having a relatively high penetration of mobile broadband dongles and datacards (14.4% in January 2011), Denmark also had a very high fixed broadband penetration (of 38.8%). Denmark’s fixed broadband penetration is significantly higher than virtually all other EU countries.
I, therefore, do not expect to see any major decline in fixed broadband penetration, nor do I expect to see any strong growth either. Fixed network operators will increasingly face the challenges of a saturating market, and will need to drive ahead with investment in superfast broadband services to help counter pricing pressures and competition from mobile broadband services. In comparison, mobile broadband penetration will continue to increase across all EU member states, although there will be substantial differences in growth between markets. Countries such as Finland, where mobile broadband services are affordable, coverage is extensive and operators are investing strongly in LTE services, will inevitably achieve much stronger growth than markets such as the UK, where operators are applying a number of tactics (such as reduced data allowances) to constrain mobile traffic growth and are not pursuing early LTE deployment.
About the author:
Mark Heath, of telecom consultancy company Unwired Insight, provides in-depth telecom analysis. Mark has authored more than 40 reports in the wireless telecommunications industry.
Extensive coverage is essential to achieve high penetration of mobile broadband
Voice revenues of mobile network operators are under intense pressure from a combination of competition and regulation. Strong growth in mobile data revenues is now essential, in order to reverse falling ARPUs. Mobile network operators must look beyond mobile messaging for this growth, since mobile messaging (particularly SMS) revenues may decline, as they face competition from alternatives such as mobile email and social media (including Facebook and Twitter).
Mobile network operators have little choice but to drive mobile data revenues and yet, as I will show, this cannot realistically be achieved without significant network investment. Given declining ARPUs, the natural reaction of most mobile network operators, under pressure from their investors, is to find ways to cut costs and try to maintain profit levels. Capital investment is an all too easy target. However, at this critical time, mobile network operators need to invest significant sums or find cost-effective ways to dramatically enhance their mobile networks (for example, through network sharing).
Only with high-quality networks can mobile network operators realistically attract high take-up of mobile broadband services, as shown in the figure, below. The figure shows the clear relationship that exists between the penetration of mobile broadband dongles and datacards and 3G population coverage for a number of European countries (in January 2011).
Relationship between mobile broadband penetration and 3G population coverage, January 2011
Mobile network operators in Scandinavian countries, such as Finland, Sweden and Denmark, have developed a reputation for providing mobile broadband services with very high quality of service, and offer extensive 3G/HSPA coverage. This extensive coverage has helped them to achieve mobile broadband penetration levels well in excess of 10%. In comparison, operators in the UK and Germany and in some Eastern European countries, have much still to do to provide the necessary mobile network infrastructure needed to underpin high take-up of mobile broadband services.
About the author:
Dr Alastair Brydon has produced more than 40 reports on wireless telecommunications. He is co-founder of Unwired Insight.
Mobile broadband penetration exceeds 30% in Finland, in a two-speed Europe
My analysis of the latest data from the European Commission for the penetration of mobile broadband dongles and datacards across Europe reveals that:
- Finland continues to have the highest penetration of dongles and datacards – at 30.6% of the population in January 2011
- leading European markets have experienced substantial further growth in mobile penetration
- a major gulf still exists between the leading markets and the laggards.
In October 2010, Alastair Brydon reported on his analysis of mobile broadband penetration across Europe, and revealed evidence of a clear two-speed Europe. By January 2010, penetration of mobile dongles and data cards had exceeded 15% in Finland and Austria. In contrast with the leading markets, France and Germany had lower than average penetration.
Now, we have the latest mobile broadband penetration data for all EU member states for January 2011, which makes interesting reading.
Across Europe as a whole, average penetration of mobile dongles and datacards reached 7.2% in January 2011 – a two percentage point increase from 5.2% in January 2010. This reflects a slight overall deceleration in mobile broadband penetration growth during the year, since mobile broadband penetration increased by 2.4 percentage points in the previous year.
This overall average figure masks significant differences between markets, as was the case in Alastair’s previous analysis, and also masks the substantial increases in mobile broadband penetration being experienced in some countries.
Penetration of dongles and datacards for several European countries, January 2009 - January 2011
Finland continues to have the highest mobile broadband penetration in Europe, exceeding 30% in January 2011. This corresponds to a very large – 13.6 percentage point – increase over the previous year, which is substantially higher than what seemed at the time a very large increase in the previous year (of 7.9 percentage points). In Finland, LTE is being rapidly deployed in order to support this growth and enhance mobile broadband services still further.
Now, four European markets have mobile penetration rates in excess of 10%, including Finland (30.6%), Austria (18.9%), Sweden (16.4%) and Denmark (14.4%).
In contrast with the leading markets, several European countries have experienced below-average growth in penetration, including Germany, the UK and France, with 1.3, 1.0 and 0.9 percentage point annual increases (well below the 2.0 percentage point average increase across all EU member states).
In the UK, the introduction of substantially-reduced monthly data allowances for mobile broadband services has helped mobile network operators avoid major network capacity crises, albeit at a substantial cost of reduced revenue potential from data services. The combination of less attractive mobile broadband tariffs and relatively poor quality of service of mobile broadband services in the UK has significantly dampened mobile broadband penetration growth. With no substantial uplift in network capital investment in sight, and in the absence of the introduction of LTE services, I cannot see how the mobile broadband penetration gap with leading markets will be bridged, at least in the short-to-medium term. Leading mobile broadband markets, such as Finland, are reaping the benefits of very high 3G penetration coverage and early introduction of LTE services.
About the author:
Dr Mark Heath is co-founder of telecom strategy and telecommunication consultancy company Unwired Insight. He provides regular in-depth analysis on LTE and 4G, and has co-authored over 40 research reports on the biggest issues in the telecom industry.
