By Tony Brown

As more 3G and WiMAX wireless broadband services are deployed across Asia Pacific a clear trend is emerging of operators ditching all-you-can-eat plans in order to protect the performance levels of their networks, but how will this trend affect the shape of the broadband market?

It has been a very busy few weeks on the travel front with a trip to the WiMAX Forum Congress Asia in Taipei followed up with the Tellabs Analyst Roundtable in Sydney and then finishing off with the ZTE Global Analyst Conference in Shenzen – and one persistent theme emerged from all three events.

That theme being the fact that an increasing number of wireless broadband operators – across both 3G and WiMAX – are moving towards stricter download limits for subscribers and that there are increasingly few operators in the wireless broadband market that are offering unlimited packages to subscribers.

Talking to both 3G and WiMAX operators, as well as vendors, the reality of life in commercially deployed 3G and WiMAX networks is that offering unlimited downloads is a sure invitation to have your network swamped with huge bandwidth demands – much of which can often come from only a small percentage of overall subscribers.

Given that operators obviously want to protect the stability of their networks, especially when they are also offering voice services on the same network, they have taken the inevitable decision to throttle back on subscribers data allowances in order to provide a sustainable network environment.

But that means…

That decision may well be inevitable but it does create a new paradigm for wireless broadband services and creates a much clearer distinction between the offering of 3G/WiMAX operators and DSL operators wherever they directly compete in the market.

That distinction is now very much centered on the fact that at the very time that an increasing number of DSL operators are offering all-you-can eat packages – a trend taking place even in developing Asia Pacific markets – their 3G/WiMAX rivals are going in the opposite direction.

Furthermore, this trend is taking place at a time when subscribers are demanding more and more bandwidth in order to meet their huge appetite for consuming online video and up-loading their own content to the internet.

Although 3G and WiMAX operators are pushing vendors to come up with new ways to better utilize their spectrum the fact is that they will find it near impossible to go back to offering uncapped plans to subscribers.

What this development means for the Asia Pacific market will vary from country to country depending on the competitive landscape in each market but there are several factors that are likely to resonate across the region.

The first of these is that the 3G/WiMAX operators will be largely forced to compete on the pricing and mobility of their services rather than the speed or data-allowances on offer.

After all, it is all very well for a HSPA service to provide 14Mbps downlink speeds but if a subscriber is capped at 5GB of data then they won’t be downloading too much video content anyway.

Of course, by contrast, the DSL operators will use the all-you-can-eat nature of their services as a key means in which they seek to reverse the desertion of subscribers from fixed-line to mobile networks.

The Video Factor

What this scenario means for the bigger picture is that 3G/WiMAX services (in areas where DSL is also available) will dominate the value-seeking end of the market who want to use the Internet for email and light browsing and don’t want the expense of a fixed-line connection.

By comparison, the DSL market, as well as the cable modem and FTTH/B markets, will be the home for the serious web-user who needs all that extra bandwidth for viewing online video as well as online gaming and other bandwidth-intensive applications.

As a result, the crucial trick for the fixed-line broadband operators will be to guide their subscribers towards the kind of bandwidth intensive web applications that make them require uncapped DSL packages rather than migrating to 3G/WiMAX.
Of course, fixed-line operators are already trying this to some degree with their IPTV offerings – with varying degrees of success, but they will need to offer a wider range of services than this in order to keep many subscribers away from the lure of a cheap 3G/WiMAX broadband solution.

Aside from the extra bandwidth on offer the big point of difference that the fixed-line broadband operators are likely to push hard on between their services and that of the 3G/WiMAX operators is likely to be quality of service.

The biggest complaint about 3G mobile broadband services has been the frequent service drop-outs experienced by subscribers whilst WiMAX has been plagued in many markets by in-building reception problems.

As a result, given that DSL operators will be hard pressed to match the cheap pricing of 3G operators they will likely be very tempted to push hard on quality-of-service issues as a key differentiator between the two services.

The Wireless Route

The other big issue that comes to mind given the throttling back of wireless broadband data allowances across the region is the ramifications of this for countries where wireless broadband services will likely serve the vast majority of broadband subscribers.

This is all but certain to be the case in the sub-continental markets of India, Pakistan and Bangladesh and looks very likely in the likes of Thailand and Indonesia, all of which have the common factor of limited fixed-line penetration.
However, if the vast majority of these subscribers are only able to access the internet via 3G/WiMAX connections with tightly-capped download limits then this will clearly restrict the types of online content that the users of these services will access.

Subscribers with tight download limits of around 5GB are simply not going to be able to access the kind of bandwidth-intensive content and applications that subscribers on fixed-line networks will be able to access.

This problem will be particularly prevalent in India where WiMAX operators are launching services with a paltry 20MHz of spectrum and where 3G operators will likely use their spectrum for voice rather than data services.

As a result, the spectrum squeeze in the Indian market and the inability of wireless broadband services to accommodate the needs of bandwidth intensive applications operators in the Indian market are likely to be forced to extend their investment in fixed-line broadband networks rather than simply follow the wireless route.