Free article: Mobile operators should offer fixed broadband

Given diminishing mobile voice revenues and a failure to achieve significant growth in mobile non-voice revenues, bundling fixed broadband with existing mobile services is an immediate opportunity for revenue growth for mobile operators and can also be an effective means of combating churn. Furthermore, operation of a fixed broadband connection may be advantageous if new network architectures based on picocells and femtocells are deployed.

In principle, with their established brands and large existing customer bases, mobile operators could achieve strong take-up of fixed broadband services. However, broadband services are maturing quickly in many markets, so mobile operators must act quickly if they are to establish a strong foothold and make a significant difference to their ARPU and churn levels. Furthermore, while focusing on revenue growth, mobile operators must ensure that broadband services are implemented in a way that does not damage the operators’ profitability.

Mobile operators are faced with a wide range of technology and implementation options for offering fixed broadband services. Wireless technologies (such as 3G, WiMAX, and, in the longer term, 3G LTE) could be used to offer Internet services but, at least where DSL is already available, these technologies are not the most appropriate short-term solutions, as indicated in Table 1. Consequently, in the short term, most mobile operators in markets with well-developed fixed networks are likely to opt for DSL for delivery of broadband services, although this means the operators must extend significantly beyond their core businesses.

Table 1: Evaluation of technologies that mobile operators could use to deliver broadband services

Even after making the decision to opt for DSL, mobile operators must choose between different ways of implementing it, including resale, bitstream access and local loop unbundling (LLUB). These options have significantly different costs, depending on the size of the mobile operator and its ability to acquire broadband customers (as well as on the regulation and pricing of wholesale broadband services in its market). LLUB can potentially be significantly more profitable than other DSL solutions. For example, for a large operator in a typical market, LLUB costs can be 30% lower than those of bitstream access if the operator can achieve significant broadband penetration. However, LLUB involves greater investment and risk.

Mobile Operator Strategies for Fixed Broadband assesses the benefits for mobile operators of offering fixed broadband services and the impact of these services on revenue and profitability. It evaluates the implementation options available to mobile operators, including 3G, 3G LTE, cable, DSL and WiMAX. It considers DSL resale, bitstream access and LLUB, as well as partnership with and acquisition of existing ISPs, and illustrates these approaches with a range of case studies. The report identifies the best approaches for different types of mobile operator.