The Psychology of Mobile Broadband Businesses

As per my usual routine, I found my self thumbing through Google Reader (my digital NYTimes) checking out what’s buzzing in the world of mobile broadband and technology.

63 unread items later, I find a well written analysis article: What’s Lighting The Fire Under Mobile Broadband?

It takes a look at the driving factors behind mobile broadband in Eastern Europe, Western Europe, The United States and Canada. Besides the regular stuff that we’re very aware of (iPhone and G1 leading to more media consumption on advanced apps like video/music), it touches on the Psychology of Mobile Broadband Businesses.

As a result of carrier pricing strategies, roughly four out of five mobile broadband users access services via a mobile or a smartphone. The rest use a PC air card or a USB modem.

PC users tend to consume more traffic and subscribe to higher service tiers. They generate on average over a gigabyte of traffic per month, whereas phone users generate less than 500 megabytes. Carriers like higher-tier subscribers. They pay higher rates but for the most part do not consume enough data yet to overwhelm the network.

In other words, while you sleep at night they’re hoping users avoid bandwidth sucking activities like P2P clients (Bittorrent, Limewire, etc), streaming HD video on YouTube or Vimeo, and streaming music all day via Pandora. You’d better believe the network would crash if everyone wanted to download the Dark Knight in High Definition.

There’s a particular fallacy in this line of thinking. It lacks foresight. The marketplace is rapidly evolving into a culture that not just wants but expects to access the aforementioned services. “Build it and they will come” if you may. The quality of content and convenience that streamed HD video and 128 Kbps streamed music provides is quickly becoming the norm. Mobile broadband providers will seriously be up the creek if they don’t think about their normal customer’s ever increasing rate of consumption.

They’ll eventually have to pump the brakes on the 5 Gigabyte cap model that’s become a wee bit too popular in the United States. Either it’ll have to change or they’ll have to do away with broadband cards. 

You can’t give someone a Ferrari and only half a football field to drive it on.
You hit the limit too quickly. That’s what we’re approaching in the world of broadband cards and mobile broadband. In a world going for Long Term Evolution (i.e. 16-25 Mbps on average) as its 4G technology of choice, there’s simply no other way. But of course, just like the music industry trying to work the outdated business model of CD and albums, mobile broadband companies will milk this cow dry.

Here’s another fresh insight:

Sprint’s (NYSE: S) Xohm mobile WiMax solution and T-Mobile‘s 3G initiatives may alter the market dynamics in the next three to five years. If successful, Sprint’s solution will steer consumers toward heavier, PC-based use and condition them to expect higher speeds, which will push incumbent carriers to offer the same.

Meanwhile, as a market latecomer, T-Mobile is likely to offer lower-priced data plans to grab market share from incumbent players. If either of these carriers is successful, their offerings will condition consumers to demand faster, more reliable service at a lower price.

It is likely, however, that both carriers will stop short of encouraging consumer uses aimed at replacing fixed for mobile broadband. For Sprint, replacement would jeopardize its relationship with its cable partners offering fixed-line broadband. For T-Mobile, a replacement strategy for mobile broadband will overwhelm its networks.

He hit the nail on the head with this one. While one would think 100% market penetration (aka monopoly) is what every business aims for, it would lead to the demise of most. Competition and variety is just about a requirement for not just survival in business, its needed for the survival of humans. It’s how we test ourselves and become better.

If you enjoyed this post, you’ll probably enjoy my free E-Course “Wireless Broadband Exposed“. It’s like your mobile broadband pre-marital counselor and prenuptial agreement all in one. It’ll save you from any future heartache and checkbook punches that might come your way.

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