opinion


Can HSPA win a place as a mainstream broadband player?

The phenomenal growth in HSPA-subscription numbers in the past year has mobile industry group the GSM Association smelling the blood of fixed-line operators in the global broadband market, but can HSPA really make a big impact in Asia Pacific’s broadband market?

With the number of HSPA subscriptions in the region having risen by 39 million in the 12 months to end-August, to 50 million, the GSMA is confident that HSPA wireless-broadband services are ready to go head-to-head with fixed-line broadband services.

The merits of wireless technologies in delivering broadband in areas with little or no fixed-line infrastructure are well-known, and there are clearly countries – such as China, India, Pakistan, the Philippines, Indonesia, Thailand and Bangladesh – where wireless broadband is going to play a huge role in bringing connectivity to the masses.

We have already seen HSPA carve out an impressive niche for itself in Indonesia and the Philippines, where mobile operators have moved adeptly into the gap in the broadband market left by their fixed-line rivals.

Of course, HSPA will be challenged in many of these markets by WiMAX services, though WiMAX operators are starting at a significant disadvantage, given that incumbent mobile operators have a base of users to whom they can sell wireless-broadband subscriptions.

In addition, WiMAX services are likely to be at a considerable timing disadvantage, with commercial services still some way away from launching in China, the Philippines, Indonesia, Pakistan and Thailand. Launches in Bangladesh and India should be ready to proceed next year but could be delayed, given the global economic slowdown.

But although HSPA is in pole position to dominate broadband technology in these emerging markets, there are some serious downsides to building a broadband business model there, including low affordability, PC penetration and literacy levels.

As a result, perhaps HSPA’s real opportunity in developing markets and some developed markets is as a genuine rival to DSL services in urban areas, where it can compete directly on price and even on speed, given that DSL services in some markets offer only 256Kbps.

HSPA is already shaping up as a significant force in countries with developed broadband markets, such as Australia and Singapore, where many young subscribers have latched onto it as a “personal broadband” service used alongside their residential fixed-line broadband connection.

A little over two years ago in Australia, almost nobody outside the tech crowd had heard of mobile broadband, but now you can hardly help but see an HSPA USB dongle plugged into a PC or laptop when you visit someone’s home, especially in homes of fixed-line-broadband laggards.

The gap in pricing and value between fixed-line and wireless broadband services is narrowing sharply in Australia and other mature broadband markets in the region, meaning that there might be a significant migration from fixed-line to wireless-broadband services, particularly in these belt-tightening times.

In Australia, Telstra offers DSL services starting at A$29.95 (US$21.20) a month for a connection speed of just 256Kbps and a download limit of just 200MB, and its cable-modem service costs the same, albeit for a potential downlink speed of up to 8Mbps, though operational speeds are far lower.

In comparison, Telstra offers HSPA mobile broadband services on its much-vaunted Next G network for A$39.95 a month with a top – often achieved – downlink speed of 3Mbps and a download allowance of 400MB a month.

Other HSPA carriers in Australia, especially the stand-alone operators, are offering even-more-aggressive pricing plans. Hutchison’s 3 is offering a 1GB download plan starting at just A$15 a month with a maximum downlink speed of 1.5Mbps, and Optus’ cheapest HSPA plan costs A$29.99 for 2GB of data.

Given that HSPA services can clearly compete with their fixed-line rivals in terms of pricing, the key question is whether they can compete in terms of performance.

At the moment, subs choosing to use HSPA rather than fixed-line broadband services are typically light Internet users, and HSPA does not offer enough in terms of actual operational speeds or download allowances to attract the core of subscribers in the broadband market.

But the opportunity is there for mobile operators to upgrade their HSPA networks to offer both higher downlink speeds and greater data allowances and really begin to bite into the fixed-line-broadband market.

The opportunity could become even greater if the economic downturn persuades subscribers to choose between keeping their fixed-line or mobile services, both of which offer voice and broadband, a scenario that logic and historical trends suggest would see subscribers opt to keep their mobile rather than fixed services.

Nonetheless, HSPA services need to move to the next level in terms of performance if they are to attack the mainstream broadband market, since most HSPA users on entry- to midlevel plans get only about 1Mbps downlink speeds in practice and download allowances of only about 2GB.

But once these plans begin to offer operational downlink speeds of 3Mbps and above and download allowances of about 10MB, the game will start to change in favor of HSPA.

The big question will be what downlink speed subscribers require and how much data they need to download, since subscribers wanting to access IPTV services or download bandwidth-intensive video will stick with fixed broadband services.

But the operational speeds of 3Mbps and above set to be offered by HSPA over the next couple of years will probably be enough to satisfy the needs of subscribers who are not bothered about IPTV and heavy data downloads, presenting a major opportunity for mobile operators in both developed and developing markets and a serious challenge for their fixed-line rivals.


One comment

  1. Martyn Roetter 24/10/2008 @ 3:18 pm

    In a longer term perspective I think it is also important to point out the complementary nature of fixed and mobile broadband services, i.e. customers will want to use fixed BB access from the home and other locations where they spend considerable time (not of course excluding local wireless technologies for in-room and inter-room connections to the fixed access point), and mobile broadband when they are traveling. Physics tells us that fiber optic and even hybrid fiber/copper systems will be able to support much more traffic/user and per square kilometer than wireless systems. In urban areas where eventually there will be high densities of intense and simultaneous BB users fixed BB access will be essential. The role of HSPA/WiMax etc. will be greater in countries and regions where, just as with telephony, the fixed infrastructure is inadequate and new investments in fixed access networks are slow to materialize.

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