Mobile broadband growth at threat from network costs

May 13, 2016

According to a Finnish mobile strategy consultant, Omnitele, the cost of network equipment is a serious threat to the continued growth of the mobile broadband market.

It warns that mobile operators could pay up to several hundred euros per broadband subscriber in network CAPEX alone. This is more than ten times the benchmark CAPEX per voice subscriber.

Traffic-dependent infrastructure software licence fees in particular are a threat to mobile broadband profitability.

The consultant has stated that, when data traffic increases, it quickly becomes very expensive to upgrade and expand the networks, which is a clear threat to the mobile broadband business case.

The popularity of mobile broadband flat-rate services with High-Speed Packet Access is driving the market forward, but operators also need to have a clear strategy to limit extreme usage.

A senior consultant at the company maintains that broadband operators are faced with entirely new technical and commercial challenges compared to 2G.

They need to move the business forward but at the same time must limit extreme usage that degrades services or requires disproportional network investments.

In Omnitele’s opinion, detailed techno-economic business models must be developed to tackle new broadband challenges effectively.

In 2G it has been relatively easy for operators to estimate voice CAPEX and related costs, while mobile broadband services require much tighter links between the technical and commercial aspects of the business.

This approach is necessary to make sure that profitability can be sustained.

Omnitele operates internationally, and its main clients are mobile operators, various system suppliers, regulators and ministries across six continents.

The company offers detailed technical expertise complemented by a solid business understanding and concentrates on mobile communications network planning and business operations development.