However, operators will need to content themselves with the fact that user growth will be far faster than revenue growth, meaning more users and more data traffic, but declining average revenues per user (ARPUs).
Users of mobile broadband services (3G and 3G+ technologies) will grow from 181 million in 2008 to over two billion in 2014, growth of 1024%, according to Ovum’s latest research.
In 2014 Ovum forecasts that there will be 258 million users worldwide accessing mobile broadband services through laptops, which are connected via USB modems, datacards or have embedded mobile modules.
Steven Hartley, senior analyst at Ovum and co-author of the research, stated: “This is a staggering 1022% growth from 2008, which is when mobile broadband supposedly took off.”
Michele Mackenzie, principal analyst at Ovum and co-author, added: “Operators can also expect a similar growth rate for handset users of mobile broadband services, but starting from a much larger existing base. We forecast that handset users will grow from a base of 158 million in 2008 to almost 1.8 billion in 2014.”
The most aggressive growth comes from emerging markets, where the unavailability of fixed broadband offers a major opportunity to mobile broadband players. For example, 40% of total mobile broadband laptop users will come from Asia Pacific in 2014. The advent of 3G in markets such as China and India, the sheer number of mobile users and poor fixed line penetration in these markets means that broadband access to a very large number of people will be purely mobile. For many though, Internet access will be through the handset. In China, there will be 52.5 million laptop users versus 325 million handset users, a ratio of 6:1.
However, even in mature markets such as Western Europe, the slowest growing region between 2008 and 2014, user growth in laptop access over the next five years is set to reach 747%, and 918% in handset access. Hartley continued: “Such recession-busting growth will be music to the ears of operators. The ubiquity of the Internet and the desire to be connected on the move are key drivers for this, as will the increasing adoption of prepaid tariffs, which support the complementary nature of mobile broadband in such regions with high fixed broadband penetration.”
On a global level, revenues grow at just 44% of the rate of users. A signpost as to the reason can be seen in the fact that, as with most mobile services the vast growth in mobile broadband user numbers in emerging markets does not provide corresponding revenue growth. Therefore, the contribution of each region remains broadly the same across the forecast period. In 2008 Middle East, Africa and South & Central America contribute 3% to total global revenues and this only rises to 9% by 2014.
Mackenzie said: “Several operators have touted the idea of plugging the ARPU decline with value added services, yet we are yet to see anything sufficiently compelling in either the laptop or handset space. Evidence from other broadband markets suggests that banking on such revenue to make business cases fly can be extremely dangerous.
While Hartley commented: “The only alternative is to employ ever more ruthless network efficiency to reduce OPEX sufficiently in order to defend margins.” The dilemma is that by 2014 network quality will have become an increasingly important service differentiator.
Therefore in Ovum’s view, balancing both sides of the equation will need to become an essential skill for mobile operators if they want to enjoy a share of the mobile broadband spoils.