For a long time, Ovum has been skeptical that 5G will seriously erode fixed broadband services. According to a recent study, Ovum predicts that the proportion of households worldwide is mobile-only (ie, not using fixed broadband, but only using mobile devices to meet all data connectivity requirements) will increase by 14% by 2024 and the overall proportion will exceed 30%.
In those emerging markets where fixed broadband networks are slow or stagnant, but offer affordable 3G or 4G services, or even 5G services, their mobile-only growth will be particularly strong. At the same time, fixed broadband penetration will increase to 50% by 2023 (although the growth rate will be slower). By 2024, the global Internet access rate will reach 80% or more, and in 2017 this ratio will be 60%.
As mobile pipes become wider, data traffic charges become cheaper. So solid-mobile replacement is taking place. However, Ovum’s survey in developed markets found that mobile-only consumers are not ordinary telecom users.
Who are mobile-only customers?
Mobile-only customers are often millennials and are usually students living in multi-family apartments. Ovum’s ‘Digital Consumer Insight: 5G and Mobile-Only Consumer Reports’ emphasizes that more than half of the fixed broadband consumers surveyed are unrealistic about mobile data traffic limits and/or the cost savings they can achieve.
Mobile-only is basically about the family, not the individual. Many families will have at least one mobile-only member. However, in the next few years, even if there are incentives to encourage the entire family to abandon fixed broadband services, the number of ‘abandoners’ will not increase significantly. This is because:
- By 2024, consumers will be able to enjoy a wide range of fixed broadband speeds of 100Mbps+, while the penetration rate of 5G will still be low.
- Smart homes, connected TVs and other devices in the home that require fixed broadband and routers are growing exponentially.
- Younger family members (especially in the United States, South Korea, Japan, and China) spend more time in the home. So they spend more time using home fixed broadband connections.
In short, fixed broadband services are not stagnant; just as mobile pipes are getting wider with 4.5G and 5G, fixed-band Gigabit pipes are becoming wider as well, ready to accommodate more data-intensive home broadband services.
For integrated operators, a significant way to stay ahead of fixed-shift alternatives is to maintain fixed-speed broadband speeds and ensure the quality of experience with lower latency, especially for gamers.
In addition, Ovum sees a number of new trends in solid-bundling bundled services in the market as operators attempt to lock the entire family through network connections and content.
In developed markets, mobile-only offers the best growth opportunities for mobile operators and mobile virtual operators and their suppliers. This means that integrated operators should target mobile-only consumers, for example, through a mobile sub-brand, SIM-only or pre-paid service. Most mobile-only customers will become new Internet users; as users, they are part of any operator that cannot be avoided.