Mobile Broadband: New Business Models Needed?

The good news is that mobile broadband--using PC dongles or cards or mobile handsets--is growing fast. The bad news is that all that new data traffic is straining mobile networks.

Irish regulator ComReg, for example, notes that there were 1.27 million broadband subscribers at the end of March, up 28 percent from a year earlier and up six percent from the previous quarter.

But this has been driven mainly by mobile broadband subscriptions, which have almost doubled over a year with 90.6 percent growth.

And Ericsson predicts that mobile broadband connections will surpass fixed broadband connections as soon as 2010 (click image for a larger view).

Originally "dimensioned" to cope with small-screen devices used occasionally, 3G networks are having to cope with laptop-sized video downloads, hours-long social networking sessions and rich Web 2.0 sites which download content "in the background".

In some cases, says researchers at Telco 2.0, the revenues from mobile broadband services are not even covering the costs of delivering data to the users.

That suggests mobile operators may have to revisit their pricing and packaging plans.

Today, most mobile broadband subscribers buy traditional monthly contracts, typically over 12 to 24 month periods. The problem is the perceived value versus price, if an increasing number of mobile broadband devices are put into service and most of those devices use little data.

Broadband connectivity costs are evaluated one way when a single connection at home can be shared among many users, and when usage is fairly frequent. Broadband costs will be looked at quite differently when each user must buy multiple connections on a device-by-device basis.

That suggests an eventual need for pricing mechanisms of all sorts, most based on ways to better match usage to cost. Session-based access, similar to the familiar WiFi hotspot model, is one option. Temporary access is yet another possibility.

Bundling of mobile broadband with other services such as fixed broadband or mobile voice services, or creation of broadband family plans, are other options.

Ad-supported access is conceivable, though the model has not worked all that well for communications services, at least so far.

Prepaid and casual use models also likely will be needed. Perhaps most users will be comfortable paying for a home fixed broadband connection and then mobile broadband for their smart phones.

But as game players, music players, cameras or other devices start to benefit from broadband connectivity, episodic use plans at relatively low prices seem inevitable.