How Much Substitution Will LTE Drive?

Long Term Evolution might be a "future" strategy in most markets. But it is starting to look as though LTE already has become a marketing platform in the U.S. market. Every major mobile operator already is deploying, or trying to figure out how to deploy LTE.

Beyond that, some have been waiting for evidence that fourth generation mobile networks are fast enough to displace some amount of fixed broadband access. Up to this point, the actual amount of such product substitution has been fairly limited, though consumers in Austria have been enthusiastic about relying only on mobile for broadband access. 

In Austria, 19 percent of households say they use only mobile broadband, and have no fixed broadband access. In Italy, about 14 percent say they have "cut the cord."

In the United Kingdom, about five percent say they now use only mobile broadband, while six percent report using only mobile broadband in the U.S. market. But those figures probably will jump as fourth generation LTE networks reach ubiquity in some markets. 

The reason is that LTE should should in some cases offer users about an order of magnitude faster access than 3G. 

And that will entice at least some users to evaluate LTE as a reasonable substitute for fixed broadband, especially lighter users who do not watch lots of streaming video, that do not share a single fixed connection for more than one or two light users, and who might conclude that the cost of a single mobile subscription with LTE offers a reasonable savings compared to buying both mobile service and a fixed network connection.

Verizon Wireless, for example,  now plans to complete its LTE rollout by the middle of 2013, two quarters ahead of its previous goal to blanket its 3G footprint with LTE by the end of 2013. 

AT&T now appears to be accelerating its own LTE build as well. AT&T and Verizon both have indicated they believe LTE can be a viable "next generation" broadband access network for many users in rural areas, for example. 

In that sense, both AT&T and Verizon will themselves try to drive LTE cannibalization of fixed broadband access. So watch for new signs LTE is driving more substitution for fixed broadband service. 

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