With 4G, could you ditch your ISP?
With mobile services improving, we talk to Informa Telecoms and Media about whether there's a threat to fixed-line broadband
LTE services arrived in the UK last month with EE's 4G, and with speeds exceeding many ADSL connections the mobile internet technology could prove an alternative to an ISP contract for some users.
With initial speeds of up to 20Mbits/sec in our tests, 4G offers faster speeds than some fixed-line connections - Ofcom's last report said the UK-wide average was 9.7Mbits/sec.
Once coverage is improved and capacity issues - such as EE's paltry 500MB data cap on some contracts - are addressed, consumers could ponder whether they really need to pay for a broadband connection at home as well.
While there's no suggestion fixed-line broadband networks could be replaced en masse, the move could make sense for those without heavy broadband use - something that is already happening in more LTE evolved markets such as Japan.
LTE is certainly proving in Japan that it can take away or slow down fibre growth because it offers a compelling alternative
The situation was highlighted by analysis from Informa Telecoms and Media, which looked at the way LTE subscriptions were eating away at fibre into homes in Japan.
Japanese telecom firm NTT's fibre divisions have been forced to cut their prices by 35% to try and stop the flow of customers to LTE networks, the analyst firm said.
NTT's mobile arm DoCoMo launched its LTE service almost two years ago and already has more than 6m customers, while growth in new fibre-to-the-home customers has slowed significantly.
We spoke to Informa senior analyst Tony Brown to find out if the trend could be repeated in the UK.
Q. Is LTE a threat to the fibre networks?
A. It's not a threat, but what we do see happening in places like Japan is a surge of early adopters going to LTE and the networks are relatively uncongested so now's a good time to get fast downloads.
Although the fixed broadband networks need to be upgraded, it's interesting how much custom LTE will take from them. You need the fixed-line networks for the heavy grunt, but how many homes will go with LTE instead?
People are saying: "if I had a fibre connection and was downloading all day, that's great. But if I've got a smartphone connection that I'm paying for anyway and it comes with 3GB of data – which isn't huge but enough for web browsing and emails – wouldn't I be better off using that with my LTE device and tablet and just having one account, rather than paying for two?"
People that work with providers have been telling me they're seeing people make that choice, they're saying “I don't really need that fibre connection because I can do most of what I need to do one LTE”.
Q. Won't traffic limitations mean people have to keep a fixed line?
A. LTE's working fine at the moment, because the networks are uncongested, but when they start filling up and slowing down, subscribers might retake fibre or fixed-broadband connections, but we don't know that yet.
If you think about the app world and the applications that are being developed, they're being brought out for mobile devices so they're not high bandwidth. What's happening is almost a new internet being designed for smartphones which is running a lot of lower bandwidth apps and not so much HD video.
Going forward, and what NTT is trying to find in Japan, is how can we make fixed broadband more sticky - they've tried TV services, which hasn't really worked. NTT's companies want a balance between the services – they don't want everyone clogging up mobile, and want customers on fibre, which is why they've cut prices by 35%.
LTE is certainly proving in Japan that it can take away or slow down fibre growth because it offers a compelling alternative and people are getting more savvy about how to get the most from their [data] allowances.