3G broadband uptake pushes operators to stealth

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3G broadband uptake pushes operators to stealth

Mobile telcos have stopped advertising loss-making 3G wireless broadband services and may have to cut off high-use customers to improve quality of service.

Speaking to iTnews, vice-president of A/NZ and Pacific for Acision, Bill Dekker, said mobile data services is a "loss leader" for many local telcos.

"They'd be happy at the moment if they were making any margin at all," Dekker said.

Part of the profitability issue, Dekker said, is that providers have been focused on subscriber numbers and topline revenue rather than underlying profitability.

This is now coming to a head with providers such as Optus recently forced to upgrade backhaul to its base stations to reduce congestion on its 3G network.

"The question is if they keep getting subscriber growth, how much more money will Optus throw at [their network]," Dekker said.

"The consensus in the industry is that you can't just keep throwing money at it."

He continued: "If you notice, the only ones advertising mobile broadband now are Hutchison. It's largely marketing-by-stealth for the others - if you walk into a retail store and ask for it, they'll sign you up.

"The reason for this is that carriers don't know how much impact [further subscriber growth] will have on the network.

"They don't want to spend another X hundred million dollars to fix backhaul issues for revenue they won't see."

Other profitability issues stem from mobile broadband being used as a replacement for fixed services, although the recent Whirlpool survey indicated a decline in the number of consumers viewing 3G services as a fixed replacement.

"The lion's share of mobile data is from laptops with wireless dongles - they account for 80 to 90 per cent of mobile data being used," Dekker said.

"Because people treat it like a fixed line it clogs the network. Operators need to find ways to manage that traffic more efficiently."

Some providers are said to be looking at traffic prioritisation techniques such as those offered by the likes of Acision.

Dekker has previously pointed to the potential of real-time traffic monitoring and analysis to reduce congestion and spread traffic loads more evenly.

He admitted that prioritising some forms of traffic over others could lead to similar debates such as net neutrality in the US, but also said that Acision "is getting a lot of traction" stateside with its systems.

Dekker said that operators that didn't invest in backhaul or traffic prioritisation may need to consider ways to encourage high-capacity users onto different service types - or getting rid of them altogether.

"You could throttle back their traffic and optimise the network for higher margin customers," Dekker said.

"The lion's share of profit comes from good customers and a lot of people are going to say do you really want to keep those bad customers?

"It's almost like Darwin's natural selection for customers. If the people that are exceeding fair use policies drift away it's probably not a bad thing but these are decisions that operators need to make."

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