Mobile broadband prices at crossroads

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Mobile broadband prices at crossroads

Joe O'Halloran

The growth of mobile computing has certainly been driven by the competitive nature of mobile broadband access but it appears that as telecoms operators feel the pinch from the credit crunch, the days of cheap mobile broadband could be over.

According to reports by Swedish media outlet Dagens Industri, Telia, the Swedish incumbent fixed and mobile operator is planning to increase its mobile broadband subscription prices.

Commenting on the ramifications of the development if accurate, telecoms, IT and media industries research firm Analysys Mason said that that the move highlights the operator’s need to ensure a positive return on its investments and that this could be a sign that Telia is acknowledging that current pricing models are making this ambition difficult.

“Swedish MNOs seem to have gone slightly further than many of their European counterparts,” commented James Allen, Partner at Analysys Mason. “They have introduced unlimited usage subscription packages at low prices, thus essentially positioning mobile broadband as a substitute for fixed broadband. These aggressively priced offerings have surely succeeded in driving growth in the market – during 2007, the number of mobile broadband subscribers increased from 92,000 to almost 376, 000 – but there is a disadvantage to this approach. As a Telia representative put it: ‘We need to find new models instead of fixed monthly fees, otherwise it will be difficult to run this business’,” Allen added.

It may well be the case that Telia and other operators around Europe will be inclined to investigate offering new mobile broadband tariffs related more to usage than peak speed. Such new pricing models will inevitably be dearer and less flexible from an end user perspective and may make firms curtail the amount of business professionals they empower with mobile broadband accounts.

Offering a further explanation for the move, Rupert Wood, Principal Analyst at Analysys Mason, suggested that that even though mobile broadband was a driver of growth, many MNOs were generally offering mobile broadband services for less than their fully allocated cost.

“It may make sense to fill networks with inexpensive mobile data traffic rather than leave them empty, but there will clearly be a point where the economics change. Telia seems to have foreseen this point and is taking steps to protect its investments. The reaction from consumers and competitors will be a critical factor in whether it succeeds,” he concluded.

 

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