What Keeps Users from Going 'Wireless Only' for All Services?

What keeps users from switching from fixed network access to mobile-only access? The answers obviously matter, for both mobile service providers who could see a big upside from shifting access away from fixed networks and towards wireless alternatives, and for fixed network broadband access providers who want to prevent that from happening.

At the moment, the much-larger consumption caps, faster speeds and lower per-bit prices are the biggest advantages of fixed network approaches rather than mobile approaches.

On the other hand, an apparently-growing appetite for using the Internet “on the go” could be a growing value for many users. So, one might argue that it creates the set-up for a “war of value” that will determine how important mobile broadband becomes, and how much a competitor it ultimately will be for fixed network broadband.

Entertainment video could become the decisive factor, one might suggest. If any substantial number of users decides to switch from linear  video entertainment, which has no bandwidth cap implications, to online versions that do have such caps, then the price-per-bit will tip the value scales to fixed networks, which offer a one or two orders of magnitude advantage in consumption buckets, with an advantage in price per bit as well.

But that might be true only for users who shifted virtually all of their viewing from a linear subscription video format to online consumption. Some users, with a lighter consumption profile, might find that larger wireless buckets of use, plus the avoided costs of the linear video subscriptions, avoided broadband access and voice costs, could well lead to a scenario where the mobile-only value-price relationship actually is clearly better.

That might not be the case in a multi-person household, but could work for single-person accounts.

In the U.S. market, Verizon Wireless might be among the earliest mobile service providers to try and figure out all the value and price relationships that encourage people to switch to a mobile-only approach.

There are some institutional factors at work. First, Verizon has a relatively smaller fixed network footprint than AT&T, for example. It has a higher percentage of revenue from enterprise accounts than AT&T, and by some estimates, continues to lead in the wireless business, in terms of gross revenue and profit margin.

Verizon’s recent agency deals with leading cable companies suggests both an effort to extend its position in wireless, and a potential way of testing how far a wireless strategy might be pushed, outside the regions where Verizon also operates fixed networks.

If it can provide high enough speeds, reasonable levels of pricing, and then someday adds key apps, such as online versions of the content people now expect from their linear video subscriptions, Verizon might someday find that the argument for going wireless-only makes more sense than it might today.

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