Are African Operators Ready for the Surge in Mobile Broadband?

A strategic business model can save African operators millions of Euros in network costs and is a powerful tool for operators to cash in on the popularity and growth of mobile broadband. A clear technical and commercial model is critical for making fully informed business decisions and ensuring broadband success, say the consultants at Omnitele.

The recent industry-wide surge in mobile broadband is both a great business opportunity and a serious risk that needs to be managed carefully to achieve bottom-line success.

"Typical mobile broadband users surf the Internet for hours and generate several gigabytes of data per month. This kind of traffic is great, but both commercial and technical aspects need to be mapped out well in advance to make sure that revenues are not swallowed up by skyrocketing network costs," says Antonios Drossos, Vice President Business Consulting of Omnitele.

In European markets many operators are already starting to feel the crunch of the ever-increasing data traffic generated by PC-users surfing the Internet with HSPA dongle modems. A similar scenario is likely to happen in African markets in the medium term as progressive mobile operators capitalize on the pent-up, mass-market demand for Internet access.

According to Omnitele the profitability of mobile broadband depends on striking a balance between the quality of the service - meaning the subscriberÃ's broadband experience - and network investments.

"The cost of the network is very sensitive to the speed and quality of the broadband service. To get an increase of just a few percent in quality could mean millions in additional investments. At the same time severe service degradation can easily happen once the popularity of the service takes off. Our mobile broadband model captures all of these variables and makes sure that all critical aspects of the mobile broadband business can be understood," says Pal Zarandy, Senior Consultant at Omnitele.

Another challenge is identifying the critical network bottlenecks and vendor pricing mechanisms that are typically far from transparent.

"Network investments can vary an enormous amount depending on specific network pricing schemes. The model gives operators a powerful tool to analyze costs and negotiate better deals with network vendors. The model is also instrumental in understanding where in the network traffic bottlenecks will occur once mobile broadband takes off," says Pal Zarandy.

Posted to the site on 17th November 2008