Research Notes

The development of the mobile broadband market is forcing operators to co-operate with each other and share networks

the alternative is a national and regional consolidation of the industry.

There is no doubt that the mobile broadband market is exploding and that mobile broadband is probably very close to being the fastest selling product in mobile industry history. New PCs with built-in 3G/HSDPA are resulting in people choosing a mobile solution, rather than a stationary solution.

Around the world and especially in Europe, we are seeing how the roll-out of mobile broadband is accelerating and how competition is resulting in prices dropping at a speed faster than the growth of the mobile broadband market. Quite simply, operators are battling over their share of the mobile broadband cake and doing it in a way – and at a pace – that is resulting in them not being able to get a return on the infrastructure investments they have already made – and those they are facing.

When the mobile market initially launched, the first operator on the market acquired the most customers, the second operator on the market became the second largest, the third the third largest, and so on. Basically those that first entered the market in the early days, were most often those that had the greatest success and became the biggest on the voice and SMS market.

When you examine the mobile broadband market, you will see that here, most operators launch simultaneously – in reality it is not possible to be the first operator. Instead it will be the operator that is best at marketing and selling their products that will find it easiest to take the largest share of the mobile broadband cake.
In practice this results in those that have the largest mobile voice base and most traditional broadband customers will find it most difficult doing business and thereby also find it difficult to attract the same number of mobile broadband customers as their existing number of voice and traditional broadband customers. Mobile broadband is the small operators’ opportunity to change the market situation.

The increased competition over mobile broadband customers has on many markets resulted in mobile broadband prices plummeting and ending at a level where customers can acquire a mobile broadband connection at the same price – or even cheaper – than a traditional broadband connection.

In countries where mobile broadband has the highest penetration, this has resulted in the price of a mobile broadband connection being lower than the price it costs the operator to produce, market and sell the broadband service.

In countries like Sweden and France, the regulative authorities have already voiced their concern about the industry and the French regulative authorities have directly encouraged the industry to co-operate with each other regarding the roll-out of mobile broadband networks.

In Strand Consult’s new report we have examined the challenges operators are facing on the mobile broadband market and we are convinced that the battle over the mobile broadband market will result in both national and regional consolidation.

We are convinced that operators will have no choice but to co-operate as we have seen in Sweden and build jointly owned networks. The alternative is that the enormous costs will result in operators with the weakest economy being taken over by the strongest operators.

That huge pressure on prices can result in consolidation is a scenario that operators in Denmark, Holland, Finland, Germany, Brazil and Austria have already experienced. The winner is – and will always be – the company that can produce the cheapest voice minute, SMS or MB data. Cost efficient production will be essential on the future mobile market.

See for yourself. Order Strand Consult’s new report Successful Strategies for the Mobile Broadband Market about the mobile broadband market and learn how a number of selected markets are developing and get inspiration to achieve success on the mobile broadband market.

The big question is who will be the consolidator and who will be consolidated – we believe we have the answer.
More information: Successful Strategies for the Mobile Broadband Market

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