Sunday, November 30, 2008

Broadband - global forecasts

Broadband number crunching

The pundits seem to be trying to outdo each other with forecasts for broadband uptake. One thinks the world has now passed the billion user milestone, and Ericsson reckons that in five years time 80 percent of all broadband connections will be mobile, which would be a serious problem for the builder of the National Broadband Network.

Strategy Analytics lays claim to flagging the billion broadband user milestone. Its global forecasting model predicts 415 million broadband connection by the end of 2008 but its 'broadband user' designation " is meant to capture the multiple individuals potentially sharing a single household broadband subscription," it says, claiming it to be "an important indicator for Internet companies of broadband's global reach."

Rival number cruncher, Point Topic, at least agrees on this 400 million connection figure, and some. It says that, "as the total number of broadband lines in the world passes 400 million Point Topic forecasts that the total in the 40 biggest broadband countries in the world will grow from 393 million by the end of 2008 to 635 million by 2013. Broadband in the rest of the world will grow from 16 million to 48 million lines in the same period, so the world will add 273 million lines to reach 683 million in total.

Unfortunately Point Topic does not specify exactly what it means by broadband 'lines' Do these include fixed wireless, or mobile wireless as well?

An important question given that 3G Americas has just put out a statement claiming that "3G UMTS/HSPA mobile broadband technology continues its momentum throughout the world, adding more than 100 million subscriptions in the twelve months ending in the third quarter 2008."

This "mobile broadband" label might suggest they are talking about data connections, but subsequent statements suggest they are really talking about 3G mobile subscriptions per se. One minute they are talking about 3G UMTS/HSPA and the next about the GSM/HSPA 'family'.

All very confusing, and I suspect deliberately so to make the numbers look good and support their contention tht "the uptake of 3G services [has been]...driven by the phenomenal success of the HSPA-enabled USB dongle as a competitive fixed broadband alternative, both on speed and price." However it is impossible to tease out from 3G America's figure exactly how many 3G dongles they think are out there.

Whatever that number is, it certainly growing fast and if Ericsson is right, 80 percent of global Internet subscribers will connect via mobile broadband instead of fixed by 2013.

Ericsson CTO for North Western Europe, John Cunliffe, was quoted by Total Telecom saying: "That includes people who have abandoned their fixed-line connection in favour of mobile broadband, or are new broadband."

He contends that ease of installation will be a big driver. '"Installation of a fixed connection into the customer premises is a nightmare for both the consumer and the service provider, compared to a mobile connection which self-installs and automatically connects to the network."

He has a point. And of course he touts the impressive speed numbers that the mobile industry is increasingly talking about: 21Mbps on HSPA today and 160Mbps on LTE tomorrow.

Ericsson has every reason to be bullish, but as I commented earlier, the great unanswered question is the ability of these technologies to cost effectively support large numbers of users and to get the spectrum they need to do so. Unless there is ample spectrum, economics dictates that as the utility of and demand for it increases so does its price.

These are big unanswered questions which I put to Ovum analyst Nathan Burley in the wake of his recent comment that 'take-up of mobile broadband in Australia has been extraordinary. Ovum estimates there were over one million mobile broadband connections to PCs at June 2008."

His response was in part encouraging an in part not so. Rather worryingly he said: "My discussions with the some mobile operators show that they don't even know what the real costs of providing these services. This problem is amplified by the disconnect between operator engineering and marketing departments,"

Very similar comments were made by Qualcomm's president Southeast Asia/Pacific, John Stefanac, at a briefing in Sydney this week.

}On a more positive note, Burley said: 
"Ovum's view is that 3G networks can handle significant growth but operator margins will decline with the continued investment required to support growth.

Additionally, although spectrum is clearly an issue, operators still have lots to play with...Qualcomm is happy to offload 10MHz of prime 3G spectrum in Australia cities if someone wants to buy it. Also by the time spectrum is a big enough issue 2.6GHz and 700MHz will come along with LTE enhancements as well."

Does this mean that the NBN will be a $8 billion white elephant? Time wil tell.

No comments: