Mobile broadband network capex could reach 1,000 euro per subscriber, says Omnitele
The future of mobile broadband looks promising, but network costs are becoming a threat to the profitability of mobile network operators (MNOs) at a time of global financial crisis. Intelligent technical solutions and tariff adjustments can boost profits, but it is more likely that they remain weak or negative as long as network infrastructure prices are linked to traffic volumes. Meanwhile, revenues per subscriber are mostly flat, according to a Finnish research firm Omnitele.
Network investments in support of excessive mobile broadband data traffic could reach as much as 1,000 euro (US$1257.50) per subscriber. Continued strong growth in mobile data traffic and the relatively high cost of network equipment drive the unprecedented and excessively high capital costs, Omnitele said.
The high costs could be a threat to the continued profitability of MNOs, particularly at a time of financial crisis. "Mobile broadband services are today the mainstay of many leading mobile operators, as voice revenues continue to be under pressure. If mobile broadband is to become the new cash cow of MNOs, much stronger and fiercer capex cost analysis and controls need to be installed," stated Principal Consultant Pal Zarandy of Omnitele.
Omnitele suggested a number of measures that it says are likely to assist in resolving the cost issue. "Clearly it is very important to control the peak traffic of heavy users, as this traffic load often dictates the size and therefore cost of the network. We also strongly advocate a reassessment of the pricing schemes proposed by network vendors, as well as having a critical look at the retail pricing of existing data service packages," said Antonios Drossos, Vice President of Omnitele.
Omnitele pointed out that in some cases the data volume for mobile broadband may exceed 10GB per user per month already this year, and volumes are expected to grow exponentially following overall Internet traffic trends. The high figures for network capex are the result of a detailed techno-economic modelling and analysis for sample mobile operators given continued data volume growth and typical network conditions.
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Network investments in support of excessive mobile broadband data traffic could reach as much as 1,000 euro (US$1257.50) per subscriber. Continued strong growth in mobile data traffic and the relatively high cost of network equipment drive the unprecedented and excessively high capital costs, Omnitele said.
The high costs could be a threat to the continued profitability of MNOs, particularly at a time of financial crisis. "Mobile broadband services are today the mainstay of many leading mobile operators, as voice revenues continue to be under pressure. If mobile broadband is to become the new cash cow of MNOs, much stronger and fiercer capex cost analysis and controls need to be installed," stated Principal Consultant Pal Zarandy of Omnitele.
Omnitele suggested a number of measures that it says are likely to assist in resolving the cost issue. "Clearly it is very important to control the peak traffic of heavy users, as this traffic load often dictates the size and therefore cost of the network. We also strongly advocate a reassessment of the pricing schemes proposed by network vendors, as well as having a critical look at the retail pricing of existing data service packages," said Antonios Drossos, Vice President of Omnitele.
Omnitele pointed out that in some cases the data volume for mobile broadband may exceed 10GB per user per month already this year, and volumes are expected to grow exponentially following overall Internet traffic trends. The high figures for network capex are the result of a detailed techno-economic modelling and analysis for sample mobile operators given continued data volume growth and typical network conditions.
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