LTE stirs mobile-only debate

The move from fixed-line to mobile broadband connections is one of the hottest areas of debate in the telecommunications industry in Australia at the moment. Ovum analyst Nicole McCormick looks at the potential for swapping between the two.

Telstra became Australia's first LTE service in late September 2011 with the launch of its network, giving the industry and consumers the first chance to see how the relatively new technology would mature in the local market.

So how do its prices compare to Telstra's own fixed broadband offerings? Could customers find it attractive to cut the cord on Telstra's ADSL or cable service and replace it with LTE only?

The answer is no.

A Telstra LTE 4GB service, costing $49.95 per month independently, comes to a total bundle cost of $62.90 a month for a subscriber with a fixed voice service, as many will retain.

Conversely, a customer on Telstra's ADSL 5GB plan pays less, at $52.90 per month.

Both plans require two-year contracts and include a minimum monthly fixed line rental of $22.95.

Substitution is even less attractive for heavy data users. Telstra's largest mobile data quota, at 15GB, costs $7.53 per gigabyte. That is 35GB less data than you get on Telstra's 50GB ADSL plan, where the user effectively pays $1.46 per gigabyte.

Continuing to account for fixed-line rental along with LTE broadband in a total bundle remains important to realising the true cost of a home phone and broadband plan. 

Ovum forecasts that around 15 percent of households in Australia will be mobile-only for voice and broadband services in the long term. "Mobile-only" means that these households will not take fixed services of any kind.

The forecast reflects the fact that fixed and mobile broadband services are complementary, given that mobile services must operate in finite spectrum with a finite network; limiting video usage, for instance.

Going fibre

Fibre services for medium-to-heavy data users are also going to deliver more bang for buck than mobile, seen in the first prices outed for the National Broadband Network.

Fixed service provider Internode's entry-level provides a data bucket for 30GB for $49.95 per month; twice as big as Telstra's best-priced 15GB LTE plan at 40 percent of the cost.

Users can retain their existing fixed-line phone numbers with the provider's NodePhone VoIP service too, with no monthly rental cost for "pay as you go" calls over its network.

We see a sub-segment of the market - such as renters, students or single dwellers - as being strong mobile-only broadband service candidates. But fixed broadband and fibre are no-brainer choices for medium-to-heavy data users.

Nicole McCormick is a telco analyst with Ovum.