Mobile Broadband Is Taking Off

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As a result, the continued success of mobile broadband—and ultimately, of the carriers themselves—depends on whether they can increase their data capacity in a cost-efficient way. Bear in mind we have seen overall Internet traffic increase by more than 100% annually for the past 10 years. That's a rate of growth unheard of for mobile operators, and even some fixed-line operators are challenged to keep up.

We've even started to hear fixed-line providers complaining they make all the investments in the networks while their slice of the revenue pie is limited to the access fees they can charge users. Witness the grumbling from British ISPs about the traffic load generated by the BBC's iPlayer set-top box. If you examine today's network and transmission costs, it's clear that something dramatic has to happen if mobile operators are going to be able to compete financially with their fixed-line rivals.

Extensive Coverage

One interesting opportunity for mobile broadband is in developing countries such as Russia and Central and Eastern Europe, where mobile operators face less competition from fixed-line broadband. According to Russian market research firm SmartMarketing, these regions will rapidly adopt Wi-Fi and WiMAX, its emerging high-capacity successor backed by the likes of Intel (INTC), because both provide scalable and easily accessible routes to broadband speeds and services.

My view is that mobile operators are even better positioned to succeed in these markets because of the maturity of their technology and the extensive coverage they already provide. They certainly don't have to worry about lack of interest from users: Internet access is a killer app everywhere.

No question, the battle for top spot in the broadband market is set to intensify. It will be fought in homes, offices, and public spaces. Fixed broadband and its wireless extension via Wi-Fi have had a head start, but now mobile operators launching HSPA services are catching up. Wired networks will continue to offer greater throughput, so for data-intensive applications such as IPTV, fixed broadband will continue to dominate. But many users are mainly interested in using the Net for news and e-mail, and for these applications, mobile operators have a good chance of succeeding as long as they can harness cost-effective technology from suppliers.

Bumpy Ride to the Mobile World

Should the mobile operators succeed in mobile broadband, they may increasingly come to resemble ISPs—a prospect about which they have mixed feelings. Internet innovations and dynamics will drive their businesses as never before, and they will spend most of their time figuring out how to double the capacity of their networks every year at the lowest possible cost without compromising too much on quality.

The era of transformation from mobile operator to mobile ISP is starting now—just as seven years ago, phone companies began morphing into fixed broadband providers. That was a bumpy ride, and so too will it be in the mobile world.

Bengt Nordstrom is a vice-president in VeriSign's mobile division, formerly InCode Telecom Group. He co-founded Stockholm consultancy Northstream, which eventually became InCode.