Huge mobile broadband charges boost NBN case

By David Binning on May 23, 2011 2:28 PM
Filed under Mobility

Analyst found wireless was up to 1333-times more expensive than fixed services.

Mobile broadband can be up to 1333-times more expensive than fixed broadband services, an analyst group said.

The Cost of Mobility: Comparing the Value of Fixed and Mobile Broadband report by Market Clarity contrasted the priciest mobile plan with the cheapest broadband plan, coinciding with the launch of aggressively priced, all-you-can-eat fixed broadband plans by Australian carriers.

The study reported that there were 4.2 million Australians using mobile broadband services in December 2010.

“While carriers are looking for ways to increase the revenue they receive from mobile broadband services, fixed providers are expanding their data allowances,” said Market Clarity chief executive officer Shara Evans. “The resulting dynamic is that the ‘value gap’ between the two technologies is widening, and may continue to do so for some time.”

Even the most favourable comparisons between the cheapest mobile and fixed plans found the former close to 28-times more expensive than the latter.

The findings fly in the face of claims by the federal Opposition that high-speed wireless services eroded the case for the National Broadband Network.

“There has been a lot of talk about the National Broadband Network and why do we need it because we have mobile broadband,” Evans said.

“Mobile broadband is great but there are some limitations and one of the biggest one is price since usage allowances are really quite small compared to fixed-line.”

The study also noted that users of pre-paid mobile broadband services were getting an especially raw deal, paying between 3.2 and 5.8 times the per GB cost of post-paid services. The cheapest per-GB price for pre-paid mobile broadband was around $10, roughly 160 times the same $0.06 per GB fixed broadband plan. Fixed broadband data allowances are 100 times the median pre-paid "recharge" volume, and 40 times the median post-paid volume allowance, the study found.

A reason why mobile broadband prices were so high was the relative cost to maintain mobile base stations against that of running fixed broadband infrastructure.

There were 14,000 base stations delivering mobile broadband services in Australia compared to 2700 exchanges with fixed digital subscriber access multiplexers (DSLAMs) - the modules that sped phone lines to connect users to the internet. Mobile base stations occupied property and needed wireless spectrum often bought at public auction.

Market Clarity added that the exploding popularity of new mobile devices such as tablets and smart phones was contributing to higher network management costs.

But Evans noted a number of factors pointing to a fall in mobile broadband prices in the future: “As demand and usage goes up, there should be cost benefits that accrue because of the nature of buying additional backhaul capacity in bulk”.

And if operators deployed their own fibre, it was "there no matter how much traffic goes over it", she said.

“Also, the cost of putting a base station to a site will also cost the same irrespective of how much end users download from the site.”


Copyright © CRN Australia . All rights reserved.

Huge mobile broadband charges boost NBN case Mobile broadband is many times more expensive than the fixed-line NBN but the gap will close as volumes rise, said researcher Market Clarity.
"@pmc777 - without wanting to sound adversarial (I'm not aggro at all), could I gently point out that you have gracefully destroyed your own case. Yes, ISDN was outrageously expensive, which may ..."

Comments: 5
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May 23, 2011 6:03 PM

And still the naysaying FUDsters insist that wireless broadband is all that we will need for, oh, say, the next fifty years.

Speaking of whom - hey, FUDDY, FUDDY, where are you all? Funny how it's gone so quiet all of a sudden. . .
May 24, 2011 10:28 AM
"can be", "up to"
In other words if you "contrasted the priciest mobile plan with the cheapest broadband plan"

"an analyst group said."
Must not be a very authoritative group.

It's amazing that two studies come out at around the same time, one for climate change, one for the NBN. Both sound like a politician talking through researchers mouths.

So many convenient omissions. How about the fact that we are on the cusp of a major upgrade across all carriers to LTE? And that that sets us up for a raft of upgrades into the future as economically justified?

The author of this article appears to attempt to use these findings as a club against wireless. There is an "exploding popularity of new mobile devices", yet instead of foreseeing better prices for the fledgling mobile internet market, he huffs and puffs about the current state of our first generation of serious mobile internet infrastructure.

What the author should have concluded is a question. Why do customers insist on paying more for wireless internet services when there are more equitable fixed line solutions?

With the high cost per GB for wireless and lower for fixed, it appears that the masses aren't so data hungry after all, it would be nice, but they much prefer the mobility.
May 26, 2011 12:46 PM

@ms (no, not that one): "Must not be a very authoritative group". This displays your lack of knowledge; Market Clarity is a well known and highly respected company in the comms information area.

And it seems that there was a key part of the above summary that you conveniently forgot to read, or at least quote:
"Even the most favourable comparisons between the cheapest mobile and fixed plans found the former close to 28-times more expensive than the latter."
May 26, 2011 3:44 PM
@gnome Perhaps you are not old enough to remember how expensive higher speed fixed data services such as ISDN cost when they were first available. It then took a good decade for the prices to some down to a reasonable level.
I am sure by the time the NBN get delivered if at all to the majority of Australians then mobile broadband prices will be much more comparable. As ms points out the rate of growth in the mobile market shows that regardless of price this is what people actually want. Hey but don't worry about that lets just spend $46 billion on what the government and NBN Co. think they should have and seeing as the NBN currently has more staff than customers I guess it gives them something to do with all their spare time
May 27, 2011 6:48 PM

@pmc777 - without wanting to sound adversarial (I'm not aggro at all), could I gently point out that you have gracefully destroyed your own case.

Yes, ISDN was outrageously expensive, which may have had as much to do with Telstra monopoly-think as anything else (though some might argue that ISDN prices never did become commercially realistic).

So, yes, in ten years time it is likely that wireless access will be significantly cheaper than now in real terms.

And so will NBN, for exactly the same reason of increasing usage and falling operating costs. The two technologies are almost completely complementary in practice, and so do not compete for the same sector.
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