Mobile broadband pricing at a crossroads

One of the undisputed drivers of mobile computing has been driven by the competitive nature of the mobile broadband market where operators have to date offered very competitive tariffs.

But as telecoms operators feel the pinch from the credit crunch, could the days of cheap mobile broadband be over?

As part of a bid to ‘re-instate consumer confidence in mobile broadband’ O2 UK has launched what it claims is the UK’s leading priced mobile broadband called Pay & Go.

O2 says that it is following up its commitment to offer its customers great products with clear pricing and no strings attached.

The USB stick mobile broadband offering available in a number of bundles from 3G access at £2 a day for 500MB plus £29.99 for unlimited Wi-Fi access.

Yet other operators across Europe are taking the exact opposite step.

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.

“Swedish MNOs seem to have gone slightly further than many of their European counterparts,” said James Allen, Partner at Analysys Mason commenting on the ramifications of the development.”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.

So does O2 have the answer? Well yes, for end users in the short term it would seem. But as the recession bites, will it be forced to make moves hike up prices as Telia seems to be?

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. But do operators actually have deep enough pockets to subsidise mobile broadband to encourage volume take up?