Mobile broadband is an opportunity that MNOs cannot afford to miss, but they face some difficulties in keeping the momentum going. While increasing the capacity of networks is essential to avoid reductions in service quality, MNOs need to dissociate rises in network costs from the exponential increases in bandwidth demands that have already been seen. This will involve access network upgrades, but also, crucially, the transformation of legacy backhaul to an aggregated IP infrastructure.

“In the shorter term, MNOs need to manage customer traffic volumes at a retail level, selling to the kind of customers who will not put excessive pressure on the networks,” says Matt Hatton, Principal Analyst specialising in mobile broadband at Analysys Mason. “In this respect, MNOs can pull many levers, including volume-based caps, pay-as-you-go charging and fixed–mobile bundles.”

“Fixed operators are currently underestimating the scale of the threat of mobile broadband”, says the report’s main author Rupert Wood, who argues that a repeat of fixed–mobile voice substitution will play out.

“Fixed operators, forced to invest heavily to differentiate their version of broadband from mobile, will pack more speed and features into their DSL services, but could end up with a product that, although it is better value for money, ultimately loses out to mobile because it is less flexible and involves substantially higher monthly costs for the end user.”

However, there are significant new opportunities for fixed operators.

“Instead of concentrating on expensive retail differentiation,” Wood says, “fixed operators should focus more on the rapidly expanding wholesale opportunities to provide the new backhaul and platform infrastructure that mobile broadband providers urgently need. Fixed and mobile operators will need to learn to co-habit as well as to compete.”