Rotten time for 3 to cancel mobile broadband bargain…

BT’s “surprise” cheap mobile broadband package should be a surprise only to those who didn’t know who has been sponsoring Vodafone’s rapid 3G network expansion in the UK. But the long-term effects on mobile data will only become clear in late 2010, when rival networks run out of bandwidth, say insiders.

At 16 pounds per month, the BT deal answers all consumer questions, except the unknowable one: “Will they really let us download as much data this time next year?” And the smart money says BT probably will, but rivals may not.

It’s too late to pick up the previous favourite half-price mobile broadband “Max” deal from 3 UK and Top 10 broadband ; the joint deal expires end April. But that makes BT’s launch of a re-badged Vodafone bundle well timed.
Stacey Higginbotham
(amongst many) told her readers that the deal is based on Vodafone 3G cells.

What Higgenbotham didn’t tell her readers, is that this is a quid pro quo; for the last year, BT has been expanding Vodafone’s broadband network as part of its 21st century networking (21CN) project. She reported:

BT Group introduced packages earlier this week that add mobile broadband to home services such as voice, web and video that it provides to customers. By coming out with a combined mobile and fixed broadband package, it’s mirroring a trial plan offered by AT&T and recognizing that mobile broadband can be a good complement to wired broadband, especially as consumers start adding netbooks and other mobile devices to their lives. 

Her comment was:

“If such offerings take off, AT&T and Verizon have an obvious advantage, but smaller carriers such as T-Mobile and Sprint could stand to benefit if other ISPs want to resell time on their networks. For example, BT is reselling mobile access from Vodafone to create its package.” 

Similarly, Reuters quoted Ovum consultant analyst Steve Hartley in its analysis. Hartley worried:

“BT is able to leverage its strength in fixed broadband, which makes this stand out from the `me too’ mobile broadband offers that have flooded the UK market over the past eighteen months. Our main concerns for this offer hinge on the amount BT is paying to use Vodafone’s network,” 

  – making it appear that Reuters and Ovum are unaware of the full scope of the back-room deal between Voda and BT.

The deal could be crucial. All the big mobile operators originally budgeted huge income from mobile data. When phone users simply didn’t use the technology, and when the first model iPhone used 2.5G data (GPRS) they all dived into the market with super-cheap data deals based on (primarily) Huawei modems for notebook and netbook users.

Within a year, the lavishly generous offerings were turning out to be over-subscribed.

Deals, previously sold as “unlimited” have been transformed into “acceptable use limited” small-print quibbles by those operators who can actually monitor how much data individual users consume. One or two cannot.

One consultant, having worked with Vodafone/BT on the 21CN project, told Unthinkable that “within a year, the only UK network to be able to keep increasing its mobile data bandwidth, will be Vodafone. All the rest will have severe contention problems, with too many users clustering round too little backhaul.”

And a technical contractor for one large European-wide operator confided, off the record: “We keep telling the marketing people that we simply can’t carry on growing this market. They aren’t interested, because they know we can grow at the current rate for another three months. We say ‘But in a year, we’ll be swamped!’ but marketing doesn’t have to deal with that yet, so they ignore us.”

 

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