Good news to providers of wireline broadband services and their equipment vendors; mobile isn’t going to destroy wireline! Actually, nobody who takes the time to think about the reality of mobile infrastructure believed that to begin with, but the comment does offer some opportunity to look at two aspects of broadband evolution. “Two aspects” is the relevant point because it’s become clear we have two interdependent broadband futures and not just one.
Mobile services are an RF-based extension to metro infrastructure. You pipe bits to a tower and beam them into space, and because of fundamental physics you can’t push infinite bits over RF. That means you need to have multiple towers to serve a large population of users, and that even then a large concentration of users in a geography will limit what you can deliver to them. An LTE cell might support 100 Mbps of aggregate bandwidth, which means 20 streaming HD videos even in a smallish form-factor would totally consume the capacity. To supply more, it’s more antennas and more backhaul. To illustrate the point, if you wanted to offer the hypothetical 100 Mbps per home capacity using wireless, you’d have to give every user an antenna and a backhaul, and the result would look suspiciously like wireline broadband with a WiFi in-home network.
So we aren’t going to replace our streaming 3D TV wireline feeds with mobile. But obviously we’re not going to drag fiber optics behind us as we commute or go out to dinner either. Fortunately, most users report a sharp division in what they do with mobile broadband and what they do with wireline. We don’t expect to watch feature films on smartphones, and we don’t think that getting directions to a store or restaurant before we leave for the place is exactly progress either. Microsoft Streets and Trips revisited? Anyway, communication fits into the context of living, and the sharpest contrast in how we live is the contrast between the at-home and away-from-home behavior models. Since teens practice supervision avoidance by staying away, this contrast is also the largest reason why youth behavior online differs from adult behavior.
From an infrastructure perspective, though, you can see that delivering mobile bits and delivering wireline bits is the same up to the last mile, or at least it could be. The migration to LTE is important for mobility because it’s a migration to an architecture that provides IP dialtone rather than one that pushes online bits into a voice channel. True LTE migration is designed to equip the mobile user to be a user of the Internet, drawing on the Internet service range. That, of course, is the rub in terms of revenues. The revenue per bit on internet dialtone in the wireline world is very low. If that same low-revenue model translates into the mobile world, operators lose much of their incentive to offer mobile broadband in the first place. Or they are incented to apply usage pricing to gain back what they’d lost. The service world is where operators hope to take up the slack, the place where they avoid per-bit charging because they’ve successfully become purveyors of some of those things in what I just called the “Internet service range”.
The challenge is that just what might be in that range is very difficult to predict. It’s clear that some content, meaning video, is going to be delivered in mobile form, particularly because of the tablet revolution. People are going to increasingly view “TV” on tablets, substituting personal viewing for collective TV-watching because TV lacks the compelling star power it once had, the power that got the family all seated in one place at one time. Now they all want to watch different things because programming has had to diversify to stay relevant. Tablets might well become the personal viewing platform for the home, particularly as summer reruns push viewers out of traditional TV into VoD, where finding the best thing to watch as a family may present insurmountable obstacles. Might that in turn create more interest in tablets as a platform when a viewer is out-of-home? Sure thing. But there’s more to mobile than just mobile content.
We already know that mobile advertising is different than wireline advertising, even for the same websites. People on the move who use search are more likely to be looking for an immediate purchase. People on the move are more offended by irrelevant ads. People sitting in a social setting but away from home might be more amenable to ads, though. LBS is important; mobile messaging and social features are important for roving users. We’ve only now started to see how much might be done in the way of leveraging mobility and behavior. Telcos want to cash in, but so do Apple and Google. It’s the next area of an arms race.