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Broadband will shake the mobile network operators landscape

Week 10, 2008

The mobile communication industry is ahead of many challenges. Analysts agree the handset volume growth in 2008 will be much slower than previously. Many of them agree on a 10% growth in volume for this year. This growth will reflect the evolutions of a more diversified market demand. As broadband is getting closer to a mass application, more handsets are delivered with high end features, and the ability to use broadband capabilities, such as Mobile TV. At the other end of the spectrum, handset vendors are getting ready to propose low cost handsets that provide only the main functions. As the bulk of the growth is to come from emerging markets, these low cost handsets may well represent the majority of volumes sold in 2008. The handset market is already in a restructuring phase, as we can see with the difficulties faced by Motorola and several others.

At the same time, the positioning of mobile network operators is evolving too. Most major mobile operators are involved in broadband projects, but, for the time being, it seems that most broadband bandwidth is used more by portable PC owners than by handset users. In order to develop the broadband handset market, mobile network operators will have to provide innovative applications, that go beyond accessing what currently exists on the internet.

The fear for mobile network operators is that their customers will use VoIP, be it on a portable PC or on a smart phone, rather than their own voice services. Then, mobile operators will be considered only as data pipe suppliers, with little added value. The issue will be the evolution of the ARPU (Average Revenue Per Unit), in a situation where operators will have little means to compete besides price. Analysts anticipate the mobile network operators market is about to undergo a major restructuring, leaving only very few of them in each region.

Thierry Spanjaard
Chief Editor
Smart Insights