In the last few years, telecoms markets in developed countries have seen a fast increase in mobile broadband connections and a surge of mobile data traffic. This has been driven by a number of factors:
- improved customer experience provided by the availability of new radio access technologies and roll-out of higher grades of HSPA offering high download capacity (7.2Mbit/s per cell in advanced countries and even 14.4Mbit/s per cell in dense cities)
- availability of flat-rate tariffs and large bundles at a price that is comparable, in some cases, to fixed broadband
- widespread availability of low-cost Internet dongles providing mobile connectivity to mass-market and corporate users
- the popularity of new devices such as the iPhone, which are revolutionising the mobile media experience and democratising new services (social networking, video streaming, etc.).
Today, mobile broadband operators face two major issues: coping with exponentially growing traffic while controlling network costs, and finding a sustainable pricing and commercial strategy.
In terms of the first issue, many mobile operators have recently announced major network investments (coverage extension, radio upgrades, investment in backhaul), largely driven by the mobile data traffic explosion. Michel Combes, head of Vodafone Europe, recently announced that Vodafone has invested more than EUR10 billion in network upgrades in Europe this year to support the growth in mobile data traffic. To cope with this issue, operators must look into a number of options:
- planning the right strategy in the access network, by defining the most appropriate and cost effective migration path through HSPA grades, HSPA+ and LTE, as well as the associated spectrum requirements
- entering into radio access network (RAN) sharing agreements with other MNOs, from site sharing to mutualisation of large parts of the radio and backhaul network
- exploring innovative solutions with femtocells and other high-capacity indoor solutions to offload the high mobile traffic generated in the home onto fixed networks (for integrated operators, or mobile operators partnering with fixed operators)
- migrating legacy TDM backhaul solutions to more scalable and cost-effective, new-generation backhaul solutions such as Ethernet microwave and fibre to the site
- implementing traffic analysis tools such as deep packet inspection, which will support traffic-shaping techniques to decrease the priority given to bandwidth-hungry applications (such as peer-to-peer).
The second issue poses the question, “How should operators position themselves in the market and what price is sustainable?” This question is particularly difficult to answer in highly-competitive markets; nevertheless operators can address this issue by:
- understanding the usage characteristics of the user base through detailed traffic-usage analysis – a small fraction of the subscriber base will probably be generating a disproportionately large share of the network load
- limiting usage by setting download caps or enforcing fair-usage policies
- refining customer segmentation and targeting the most profitable users – or at least understanding the profitability of the current user base
- defining innovative tariff plans, for instance targeted at data usage outside of the network busy hour
- exploring increased bundling to extract value and profitability over a wider service set – e.g. fixed and mobile broadband, mobile voice and broadband.
Analysys Mason is helping mobile operators around the world to develop their mobile broadband strategy, in particular in terms of pricing, costing and profitability analysis. We have developed proven tools and unique savoir-faire over the years, which enables us to support operators in defining and measuring the impact of their network, commercial and marketing strategies.
For more information, please contact Pierre Fortier, Lead Consultant at pierre.fortier@analysysmason.com.
