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Omnitele Questions Economic Feasibility of Mobile Broadband

Posted: 20th Feb, 2009 By: MarkJ
Finnish research firm Omnitele has questioned the economic feasibility of continued Mobile Broadband (3G, HSPA) growth. The firm warns that flat subscriber revenues and hefty network (capacity) costs could become a threat to the services profitability.

The research estimates that some users are known to consume over 10GB (GigaByte's) of data per month and this is expected to continue growing. Meanwhile investment to balance this level of usage could end up reaching nearly £888 per customer:

Omnitele's Principal Consultant, Pal Zarandy, said: "Mobile broadband services are today the mainstay of many leading mobile operators, as voice revenues continue to be under pressure. If mobile broadband is to become the new cash cow of MNOs, much stronger and fiercer capex cost analysis and controls need to be installed."

Typically a 15GB monthly Mobile Broadband package on an 18 month minimum contract from Three (3) will currently set you back £30 per month. Compared to fixed-line services that's quite expensive, but for a package that works from almost anywhere in the UK it's very attractive!

It's easy to forget that Mobile Broadband is only so cheap because UK operators found they had a lot of spare 3G capacity and couldn't figure out what else to do with it. However the underlying network costs are still high and beyond a certain point they could bite back.

Unfortunately the solution to this dilemma could involve the imposition of tighter peak time usage restrictions. Prices could also be increased or adjusted to provide a greater amount of revenue. This could be risky at a time when our own government is viewing Mobile Broadband as a magic solution to the UK's rural broadband coverage woes.
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