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From Subscribers to Connections

The global telecoms industry numbers remain impressive:

By 2020 there will be 6 billion mobile subscribers—of which, according to Nokia, 95% will have access to wireless broadband by 2015, and by 2020, there will also be 3 billion fixed broadband subscribers.

However the relevance of these numbers will decline. By 2020 there will be 50 billion fixed and mobile connections.

Obviously these will mainly be devices, some owned directly by the subscribers; but we will increasingly see an explosion in ‘smarts’. These will be deployed everywhere and will utilise the new fixed and wireless broadband networks.

There will be diagnostics (some even physically attached to patients themselves); smart meters and sensors; other measuring devices in water, gas and electricity smart grids; and smarts in the physical infrastructure of roads, bridges and buildings.

Trans-sector going wireless

More and more, the trans-sector use of the broadband infrastructure is seen as having a purposeful national function—it is increasingly viewed as the most important reason countries need such infrastructure.

The reason is fairly evident. The Brookings Institution (USA) found that employment rises from between 0.2% and 0.3% for every one percentage point increase achieved in broadband penetration. It is most significant in explaining employment growth in education, health care, and financial services.

Many of the developing countries have seen an increase of 1% in GDP for every 10% increase in mobile penetration (variations are between 0.3% and 2.9%). It is estimated that the impact of broadband could be ten times this.

So far the trans-sector debate has concentrated on fixed infrastructure in developed markets. However, there is little or no fixed infrastructure in developing countries, where there is arguably even more need to use the multiplier effect that broadband has to offer in sectors such as healthcare, etc.

This will also change the wireless business models of the future. According to Nokia, mobile broadband ARPUs are currently US$46 per month—or 13% of global GDP. This will need to drop to 5% to reach universal access.

In my discussions at the ITU conference with Indian officials who highlighted these problems I mentioned the possibility of the Indian government considering trans-sector policies that would allow these costs to be shared with other sectors, which in turn would lead to more affordable end-user charges.

This will have far-reaching consequences for the mobile industry, as we at BuddeComm have been foreshadowing for some time. The call for open wholesale-only networks won’t stop with the fixed networks; without a doubt mobile networks will follow the same path.

But it is not just the developing countries that are looking at this. Wireless broadband is also seen as the broadband solution in the rural areas of the developed world. This will require government investments, and such investments will be based on open networks.

Once content providers do obtain open access to these networks it will be very hard for the other mobile operators to stick to their closed systems.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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