How Much Mobile Substitution for Home Broadband is Possible?

Mobile substitution has been a key trend in the global connectivity industry, occurring n phases, and affected a wider range of products over time.

Mobile voice supplanted fixed voice as the preferred consumer use case. "Mobile substitution" for voice has been a global trend since the advent of 2G networks. In fact, mobile is the only sort of ubiquitous network in most parts of the world. But that now might become an issue for internet access as well.

“I will say over time--a three to five year time horizon--unequivocally 5G will serve as a broadband, a fixed broadband replacement product,” former AT&T CEO Randall Stephenson said. “I am very convinced that that will be the case.”

“Back in the 90s everybody was saying wireless would never serve as a substitute for fixed line voice because there wasn't sufficient capacity,” Stephenson said. “Well it is a substitute for voice.”

Mobile messaging displaced voice. Mobile social media displaced fixed modes. Mobile turn-by-turn navigation displaced dedicated GPS devices and maps.

Mobile phones displaced watches, cameras, music players and flashlights. Mobile entertainment video is encroaching on fixed modes of viewing (TV sets, PC or tablet screens).

Mobile internet access, which began to find niches in the 3G era, found many more use cases in the 4G era (both for home broadband replacement and on-the-go access). In developing regions, mobile internet access is the preferred form of access.

The issue now is how much mobile substitution will occur in the home broadband business. A key assumption is how much bandwidth customers really need, at what price points, before the decision to substitute mobile internet access for fixed access makes sense. 

Much depends on whether multi-user support is required, and if so, how many simultaneous users are expected. The number of supported devices also matters. So do the typical use cases. 

Price also matters. If 38 percent of users buy services in the 100 Mbps to 200 range, paying roughly $50 a month, then it is possible most customers will expect to pay less for slower speeds, even if they also expect to pay more for faster speeds. 

source: Openvault 

Another implication of buyer patterns in the U.S. market is that nearly 56 percent of U.S. home broadband customers buy services running no faster than 200 Mbps. A fixed wireless or mobile solution able to supply up to 400 Mbps might appeal to as much as 83 percent of the home broadband market. 

Over time, as always is the case, the speed requirements will move up. The point is that so long as mobile infrastructure can keep relative pace with fixed network improvements, the opportunity to substitute mobile for fixed access will be significant.

Mobile or fixed wireless probably cannot match the highest fixed network speeds. But it does not have to do so. Most customers never buy the "fastest" tiers of service.