Wireless Broadband: A Fillip for Fiber?
In developed countries, wireline broadband penetration has hit 60 percent or more, and is slowing down or stopping altogether. But the story looks very different in wireless broadband, where Vodafone Group plc (NYSE: VOD) just reported an 84 percent rise in the number of "mobile PC connectivity devices" – USB dongles and the like – in just six months. Many of these subscriptions are incremental to the customer's wireline subscription, but it's easy to imagine that a lot of households that don't yet have wireline broadband will opt for a wireless service.
Unless you download vast quantities of video, those wireless broadband services, typically based on HSPA or EVDO, already look like good value in many countries. And in an increasingly constrained financial environment, it's easy to imagine that the drift to wireless-only households will only increase. According to a Eurobarometer consumer survey taken last winter, the percentage of mobile-only households in the European Union increased from 18 percent to 24 percent between 2005 and 2007 – meaning that, if the current trend continues, a third of households could be mobile-only by 2010.
Where does that leave those with wireline assets? Wireline operators' operating costs are highly dependent on penetration rates, and if penetration drops too far, the copper network simply becomes economically unsustainable. In that situation, one possible remedy is to move faster than planned to an all-fiber network, which would enable wireline telcos to maintain the bandwidth gap with wireless. Whatever wireless is capable of delivering, it's unlikely to be able to deliver multiple HD channels, Blu-ray video, 3DTV and gaming, telepresence, or any of the other video services that we might expect to see in future. But more importantly, the evidence shows that opex in all-fiber networks is much lower than in copper networks – helping to resolve the opex dilemma created by lower copper penetration rates.
Whatever happens, broadband wireless is a game-changer that will force wireline operators to make some tough strategic choices for fixed broadband networks and those who rely on them in the next three years. The time to start thinking about those decisions is now.
— Graham Finnie, Chief Analyst, Heavy Reading