Charlie Davies, Michael Philpott, and Steven Hartley
18 Jan 2011
Broadband access is now as important as other essential utilities such as gas, water, and electricity. In developed countries, fixed broadband is available in the majority of homes and penetration is above 60% of households in many markets.
However, mobile broadband usage is growing rapidly in both developed and emerging markets. Will the future of broadband see the convergence of broadband-based fixed and mobile services? Or will mobile broadband substitute for fixed services?
Our research suggests that where fixed broadband exists, particularly in the developed markets of North America, Western Europe, and Asia, fixed–mobile convergence (FMC) solutions will predominate. By the end of 2015, 38% of the world’s 3.6 billion broadband subscribers will have access through both fixed and mobile networks. Although emerging markets represent a smaller opportunity for converged operators, FMC will still be important among certain user segments and should not be ignored.
In contrast, the fixed–mobile substitution (FMS) opportunity will account for 28% of the world’s broadband subscribers in 2015. However, this opportunity will only be viable in specific circumstances. Emerging markets with no pre-existing fixed-line infrastructure offer the greatest potential for operators, but the affordability of mobile broadband services will be crucial. In developed markets, low-end users offer some potential, but segmenting these customers will be extremely important.
FMC/FMS debate is crucial to operator investment strategies
In the developed world, broadband has become a basic requirement, while in emerging markets the adoption of broadband continues to accelerate. With the Internet increasingly becoming the primary channel for information, services, and communication, those without access will be at a distinct disadvantage. By the end of 2015, over 3.6 billion people will have broadband access, which equates to 50% of the world’s population.
Of those 3.6 billion people, 66% will have access to mobile broadband, either through a small-screen mobile handset or through a big-screen device such as a laptop, netbook, or tablet. However, 72% of broadband subscribers will still require a fixed connection to provide them with an adequate level of bandwidth in the most cost-effective manner.
Operators that are able to optimize their networks to maximize the financial returns from their customer base will be the major beneficiaries of this trend. As such, the demand for FMC and/or FMS is critical to operators’ future investment strategies.