Europe : The cost of network equipment is a serious threat to the continued growth of an otherwise promising mobile broadband market.

According to mobile strategy consultants Omnitele of Finland mobile operators could pay up to several hundred EUR per broadband subscriber in network CAPEX alone – more than ten times the benchmark CAPEX per voice subscriber.

Omnitele says that in particular traffic-dependent infrastructure software license fees are a threat to mobile broadband profitability. “When data traffic increases, it quickly becomes very expensive to upgrade and expand the networks. This is a clear threat to the mobile broadband business case,” says Mr Antonios Drossos, Vice President of Omnitele.

The popularity of mobile broadband flat-rate services with HSPA is driving the market forward, but operators also need to have a clear strategy to limit extreme usage, Omnitele says. “Broadband operators are faced with entirely new technical and commercial challenges compared to 2G. They need to move the business forward but at the same time must limit extreme usage that degrades services or requires disproportional network investments,” says Senior Consultant for Omnitele, Pal Zarandy.

Omnitele advocates that detailed techno-economic business models must be developed to tackle new broadband challenges effectively. In 2G it has been relatively easy for operators to estimate voice CAPEX and related costs, while mobile broadband services require much tighter links between the technical and commercial aspects of the business. Omnitele says that this approach is needed to make sure that profitability can be sustained.