Feature Article

November 26, 2012

LTE is Going to Accelerate 'Fixed to Mobile' Broadband Substitution

The faster mobile broadband gets, the more it will be a potential substitute for fixed broadband connections. The more people that get personal hotspot functionality for their smartphones, the easier it will be to use that feature to replace a fixed connection.

So far, mobile broadband substitution has been a relatively rare practice. Perhaps six percent of U.S. homes using broadband already seem to rely exclusively on mobile connections, some would say.

When the Pew Internet & American Life Project asked respondents what device they normally use to access the Internet, 25 percent of smartphone owners said that they mostly go online using their phone, rather than a computer.

While many of these individuals have other sources of online access at home, roughly one third of these “cell mostly” Internet users lack a high-speed home broadband connection, according to Pew Internet & American Life Project. That implies about an eight percent of households that only use mobile broadband.

Widespread Long Term Evolution capability is going to accelerate that trend.  Japan's NTT, for example, is finding consumers shifting demand from fixed “fiber to the home” networks to Long Term Evolution mobile networks.

As a result, NTT has cut fixed network broadband access prices by 34 percent, from JPY5,460 (USD67) to JPY3,600, TeleGeography says.

You might say that price cut now shows there is serious evidence for the view that Long Term Evolution is a suitable replacement for fixed network service, with the greatest danger emerging where you would expect, with younger users.

Users in Japan, who have abandoned fiber to the home, seem to be watching short form video, but avoiding streaming or downloading long form video that would put pressure on their mobile data plans.

Once again, we see that consumers are smart, and will alter their behavior and spending plans to gain the optimal value from the range of services available to them, deliberately choosing not to watch long form streaming video if it means saving money.

That is probably worth keeping in mind in other markets, as possibly more consumers weigh the value of fixed broadband and high speed mobile alternatives driven for the moment principally by Long Term Evolution.

But there are other trends that will spur more substitution. As use of tablets and smartphones is now showing, computing use has changed. More use of the Internet is related to quick sessions conducted on the go, with some immediate purpose in mind, not extended browsing. That makes the mobile device more important.

And the trend likely will happen in developing as well as developed markets. Though the amount of bandwidth consumed by mobiles remains a fraction of fixed devices, it understates the importance of mobile sessions, compared to fixed sessions.

Many high-value mobile sessions do not require consumption of much bandwidth.

Edited by Brooke Neuman

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