Thursday, February 9, 2017

Is Era of Mobile Bandwidth Abundance Coming?

Will mobile bandwidth abundance become a reality in the 5G era, for the first time in the history of the mobile business? And, if so, what changes?

Up to this point, scarcity has been the fundamental reality. Mobile bandwidth has been relatively scarce, and expensive, on a cost-per-megabyte basis, compared to fixed network bandwidth. That should change, radically, in the coming 5G era, when the amount of raw mobile bandwidth, the amount of shared and unlicensed spectrum, better radios and network architectures will lead to an increase of mobile capacity by 10 to 1,000 times over current norms.

In addition to new applications enabled either by ultra-low latency or ultra-high bandwidth, or apps enabled by newly-affordable bandwidth, even other major habits, such as the tendency to rely on Wi-Fi for internet access, could change.

All that hinges on changes both of supply and changes in retail packaging.

Conventional wisdom--and much global data--suggests that roughly 80 percent of smartphone data is delivered over Wi-Fi and 20 percent by the mobile network. The reason for that usage pattern is that consumers are rational about their spending. Offloading smartphone access to Wi-Fi lowers the amount of access they have to buy on the mobile network.

In the 5G era, that pattern might change. How much change happens depends on mobile service provider mobile data tariffs and packaging. In other words, if one assumes that “most” of the data consumption has to do with video entertainment, and if video entertainment becomes a sort of “zero incremental cost” activity, consumers might well shift much of their consumption back to the mobile network.

It would be fair to argue that unless mobile data charges (cost per gigabyte) start to resemble fixed network levels, it will be tough to shift most video from fixed to mobile delivery modes. One way mobile operators have begun to experiment with that shift is to zero rate mobile video consumption.

In the past, mobile operators mostly relied on offload to Wi-Fi to achieve those results. So the issue becomes, in an era where bandwidth might be far more abundant, whether on-network costs are so low--or equivalent to Wi-Fi access--that consumers simply will not bother to offload access to Wi-Fi.

We already can see glimmers of that behavior shift in India, where mobile data access, to the tune of four gigabytes a day, has dramatically shifted user access away from Wi-Fi, and on to the mobile network.

In India, where Reliance Jio has been offering first 4 GB of free data usage per day, and 1 GB of free data usage per day through early 2017, such offers have proven to increase use of mobile data far beyond what one might typically expect.

Since September 2016 Reliance Jio has signed up 50 million customers and has triggered a price war among India’s established mobile operators.

But Jio customers also differ from other mobile customers in India in one way: they have a very low usage of Wi-Fi connections, according to OpenSignal.

OpenSignal data from Sept. 1 to Nov. 30, 2016  (the three months in which Jio has been available), Jio users connected to Wifi networks about 8.2 percent of the time. That is well below the average of 29.8 percent of internet access time on Wi-Fi.

  • Jio                  8.2 percent
  • Idea               24.1 percent
  • Telenor          24.3 percent
  • Aircel            24.9 percent
  • Airtel             27.1 percent
  • Reliance        28.1 percent
  • Tata DoCoMo 30.4 percent
  • BSNL             31.1 percent
  • Vodafone      31.3 percent

The obvious reason for the low Reliance Jio customer use of Wi-Fi is that they simply have so much free access on the mobile network that Wi-Fi access to “save on data usage” is simply an unnecessary move. Of course, all that could--and should--change once Jio starts charging for mobile data usage.  

In other words, if mobile operators can figure out ways to neutralize the economic incentive to offload mobile data access, behavior will change.

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