Posts by Ian Fogg from May 01, 2008

IanFogg | May 01, 2008, 04:37 PM
Vodafone: Unlimited Mobile Internet Offered for Free

This move by Vodafone is a game changer for mobile Internet usage. In short they are offering mobile Internet access for free to their contract customers. The data limit is generous too: 500Mb (Which is an enormous amount to use on a mobile handset. I consider myself a heavy user, and I consume just 200-300Mb mobile data per month.)

For comparison, T-Mobile UK offer a mobile Internet add-on for UKP7.50 a month, with a 1Gb fair use limit.

This has many many implications. It removes one of the major barriers for consumers to try out mobile Internet. It should help Vodafone to defend its contract average revenue per customer, and will increases differentiation for contract tariffs over pre-pay.

iPhone pricing now looks like an even less attractive offer. Up to now, the circa 270ukp iPhone handset price and 35ukp monthly tariff (and up) costs were offset by the unlimited mobile Internet data O2/Apple included. Now, that advantage vanishes. iPhone will now have to compete with Nokia smartphones, offered for free, and combined with tariffs starting at 25ukp a month with free mobile Internet access. Those Nokia smartphones also have HSPA 3G broadband speeds, not the iPhone's dial-up speed EDGE. I expect O2/Apple to react by further dropping iPhone prices.

The other aspect that intrigues me is how Vodafone will discourage laptop owners from usage. This tariff appears good enough that some Vodafone customers may choose not to pay for mobile laptop broadband access. As 3 has demonstrated, there is a lot of pent up demand among laptop owners for good value mobile Internet access. The devil here will be in the detail of the Vodafone tariff.

The impact for the other operators will be just as great. This announcement will have aftershocks that will be felt throughout the mobile industry.

More to follow, when my French colleagues return to the office after May day.

IanFogg | May 01, 2008, 02:29 PM
BT's Long Game, More ADSL2+ and 21CN

BT's launch of ADSL2+ with 21CN yesterday isn't going to make a vast difference to the ISP retail market, or to consumer broadband speeds. Initially, under one million households will benefit, none of which are in London. Even by May 2009, when BT will reach approx half of UK households, its footprint will be largely within the area already covered by the existing LLU ADSL2+ networks of O2 and Sky, and also within VirginMedia's HFC network geography which offers similar speeds.

BT's major competitors -- Sky, Carphone Warehouse, O2, Orange, Tiscali -- have largely switched away from using BT's wholesale packages in urban areas. So, the main short term beneficiary of this launch, will be BT's retail division plus the declining mass of small ISPs that lack their own LLU network. For those independent niche ISPs, this launch may be too little, too late. Further consolidation is likely. Ironically, BT may be the purchaser of the small guys, if regulators continue to allow it.

The long term impact is quite different. BT is building the foundations for putting fibre into the last mile, eventually. To gain speed benefits from fibre, the backhaul capacity to the exchanges and BT's core network capacity needs to be greatly increased. Otherwise, the speed bottleneck shifts from the quality of the copper telephone line in the last mile, to back within the ISP network. (Even now, the UK has seen some issues even with ADSL1 backhaul capacity limiting speeds for users with telephone lines that run at the full ADSL1 speed of 7-8Mbps, i.e. contention.)

BT is playing the long game, and as a result is ceding ground in retail broadband acquisition now. This is a risky strategy given the ability to execute of BT's ISP competitors, most especially Sky.