In his wireless blog, Mark Heath addresses whether LTE can, and will, compete with fixed network superfast broadband services.
Looking at the pricing of early LTE services in Europe, LTE may present a significant challenge to some fixed operators, particularly those with slow, unambitious rollouts of so-called ‘superfast’ fixed broadband services.
The performance claims being made for LTE services (for example, with download speeds of up to 80Mbps) suggest that LTE could actually outperform some superfast fixed broadband services. For example, in the UK, BT’s fibre-to-the-cabinet (FTTC) offering, called BT Infinity, achieves maximum download speeds of only 40Mbps, with homes situated at a distance from street cabinets potentially receiving significantly lower speeds. Indeed, Internet forums are awash with BT Infinity customers reporting the results from online speed tests. Many claim that, with traffic shaping applied at peak times, download speeds can fall well below 20Mbps. My recent blog post on testing by Epitiro of TeliaSonera’s LTE network in Finland during March 2011 revealed that the average download speed was 36.1Mbps.
The maximum 30GB usage allowances for early LTE services look sufficient to support the majority of broadband users, even if the minority of high-usage customers may be disappointed. In October 2010, Cisco reported that the average fixed broadband user consumed 14.9GB per month (in the third quarter of 2010). In line with this, in March 2011 AT&T reported that its DSL customers used an average of about 18GB per month while, in January 2011, Bell Internet in Canada reported that its average broadband customer consumed around 11.5GB per month. While fixed broadband usage is increasing (by about 31% per year according to Cisco), a 30GB allowance on LTE would be able to support the usage of many broadband users for some time to come.
Applying relatively modest usage allowances is a great way for mobile network operators to discourage the top 20% of broadband users with very high usage patterns, for which mobile is not suitable (at least in the longer term when LTE networks are no longer underutilised). In October 2010, Cisco reported that the top 1% of broadband connections are responsible for more than 20% of total Internet traffic, with the top 10% of broadband connections being responsible for over 60% of total Internet traffic. In March 2011, AT&T reported that 2% of its broadband customers consumed more than 150GB per month. Mobile operators will be keen to ensure that such users remain on fixed broadband services!
Despite the fact that LTE services look, in principle, similar to fixed superfast broadband services, a head-to-head battle between them will be unlikely in urban areas, where superfast broadband services will be widely available at cheaper prices. However, outside these areas LTE could well present a major threat to those fixed operators that are embarking on sluggish roll-outs of superfast fixed broadband services, such as in the UK. With BT slow to deploy even ADSL2+ on a widespread basis, many people outside urban areas will be reliant on relatively slow ADSL services for years to come. For example, people living a significant distance from exchanges often are unable to achieve download speeds above 2Mbps. For those fortunate to live within a short range of an LTE-equipped base station, LTE could provide an attractive additional revenue source for mobile operators able to extract the value from their underutilised LTE networks.