Broadband Past and Future

Arriving back in the UK after some years abroad, I needed to decide the best way to get connected — to the Internet and to a mobile phone network (and how to get the best coverage of my beloved football team, Spurs).

While trying to navigate through the Bermuda Triangle of price, quality and content, I realised how much the broadband market has changed in the short time I’ve been away. I could now get broadband from BT, from a dedicated Internet service provider, a mobile network operator, a cable company, department store, retail outlet, my local supermarket, the post office or even from Premier League football clubs. And not only have the channels and providers changed, but the technologies that connect you to the Internet.

My experience made me wonder what mobile access to the Internet would look like in a few years’ time. For me, the crucial points are not technological advances but discretionary spending and the business models employed by providers.

I’ve been researching value-added services offered by fixed-line broadband providers recently. I think some of the marketing approaches in the fixed world can be extended to mobile broadband services.

Getting people to increase spending on value-added services, even in times of more benign economic conditions, is difficult. In fixed-line broadband, features such as VoIP, security or storage are mostly defensive plays to either offset a drop in revenue or to enhance standard offerings. Services that actually generate income are mostly group-specific content or approaches that focus on a particular business model, such as advertising, content aggregation or own-brand credit cards.

It’s fair to assume that mobile access will eventually be packaged like fixed-line broadband, even though there’s a marked difference in how people use the two. But from a marketing point of view operators and resellers need to strike a balance between developing the potential of mobile broadband and supporting access to Internet services on handsets. They need to make the most of their profit opportunities in the short to medium term, but they also need to tackle the price declines that will accompany commoditisation. How they do so is likely to vary in each country. Many emerging markets will develop unique scenarios, particularly where there’s no legacy fixed infrastructure.

I expect to see access to the Internet on handsets follow fixed-line broadband’s approach to technology features, which will lead to a frenzied search for new revenue opportunities. And mobile broadband will only give operators limited breathing space. While many companies dream of emulating Apple’s model of a tightly controlled and homogeneous environment, platform fragmentation and country-specific content will be the norm.

Platform fragmentation could upset the balance of power in the value chain. Will operators and handset manufacturers remain in the driving seat by integrating value-added services and content into their offerings or will it be the reverse? We might see content-led offerings on new types of device with subsidised mobile access, similar to ad-sponsored services like Blyk. History rarely repeats itself, so there’ll be other scenarios that go beyond what we’ve seen with fixed-line broadband — just to make life even more complicated.