In Business Model, Internet Access, Mobile

“Mobile substitution” is a funny term, as applied to the global communications business. In many developing nations, there is no “fixed network” to choose from. So mobile is not so much a “substitute” for voice, messaging and Internet access as it is the “only” practical way such services can be used.

Even in Asia, in many developed nations,  “mobile substitution” is a not a major question, since both fixed and mobile Internet access is ubiquitous and affordable. There is, in other words, no reason to choose.

The point is simply that “mobile substitution” most often is a potential market trend in markets outside Asia or Africa.

In Asia, there is a vast difference between a few countries in Northeast Asia (South Korea, Japan, China), East Asia (Taiwan, Hong Kong) as well as Southeast Asia (Singapore, Malaysia) and most of the rest of countries in Asia.

In some “more developed” countries, the question of mobile substitution for fixed network Internet access might be an issue, though it is largely an unimportant question, simply because fixed access is ubiquitous and affordable.

In most “less developed” countries, mobile and wireless are the ways most people will use Internet access services, so the “mobile substitution” question also is largely moot, in the sense that most people will use mobile as their primary form of access.

So in many of the developed countries of Asia, the choice between mobile and fixed Internet access is not highly relevant, as both mobile and fixed Internet access is affordable and ubiquitous.

In a few markets, such as the United States, even if mobile substitution for Internet services likewise remains a minor phenomenon, it could emerge as a more-important marketplace trend, once 5G networks are in place.

Over the relatively near term, perhaps nine million to 23 million potential subscribers are candidates for wireless substitution where it comes to high speed Internet access, though that solution will not make sense for all consumers.

At an incremental $55 a month additional revenue, wireless substitution for Internet access could boost mobile operator service revenues between $6 billion and $15 billion, BTIG suggests.

The key variables at the moment are total monthly data usage per account, as well as current prices for fixed network Internet access, plus the usage of streaming video apps and services.

Median fixed network data usage of 23 GB means a sizable number of the 90 million broadband customers in the United States could have their usage needs addressed by wireless.


The “sweet spot” therefore includes fixed network Internet access accounts presently using between 20Gb and 30Gb per month.

In other words, the potential wireless substitution could range between 10 percent and 25 percent of the fixed high speed access market.

The wild card is that the market is not static. With additional spectrum, shared spectrum, 5G mobile networks and even higher use of Wi-Fi offload, offers are going to evolve, both fixed and mobile.

Even if cost-per-megabyte remains better for fixed access offers, the issue is how big a difference exists between offers (mobile versus fixed) and how well each offer matches a particular user’s requirements. That is a moving target, and prices vary with volume, especially in the mobile market.

With reasonable volume, mobile price per gigabyte hovers between $6 and $10. Fixed network prices are harder to characterize, since access is not sold “per gigabyte” and there often are not formal usage limits, making “cost per gigabyte” a statistical matter.

However, virtually all observers would likely agree that fixed network price per gigabyte is lower than mobile price per gigabyte.

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