What next for the Mobile Broadband Market?
2015 brought a number of changes to the mobile broadband market. Numerous new device and tariff options have been introduced for getting connected out of the house. Opportunities are opening up for both operators and device manufacturers as increasingly more consumers are taking out a contract tariff to support the mobile connection of a second device.
The traditional mobile broadband consumer often purchased a USB Stick device on a Prepay tariff as a temporary source of primary roaming internet. As the smartphone market reaches saturation, accounting for ~85% of handset sales in 2015, the MBB market has had to adapt to the demands of becoming a secondary internet device connection. SIMs, tablet hardware, MiFi (Wi-Fi hotspot routers) and action cameras have all been introduced with varying levels of success to drive a dynamic landscape of the mobile broadband market. At the same time operators have been shifting focus between these varying elements of the market.
Changing device picture
The tablet market emergence at the start of the decade had a direct impact upon the mobile broadband market. Our tablet hardware sales show a greater than tripling of volumes from 2011 through to 2013. This brought a number of additional methods of mobile broadband connection. SIMs and tablet tariffs were born as an alternative to the traditional connection of a laptop through a dongle device. Subsidised tablets purchased attached to a monthly mobile broadband tariffs became an increasingly popular purchase method. These plans allow data roaming of the device and reduce the up-front cost of an often expensive 3G/4G capable piece of hardware. By 2014, the contract tablet market accounted for over a quarter of mobile broadband sales and mobile networks benefitted from a spill-over of their existing customer base and acquiring new customers. The contract tablet market continued to grow through 2015 despite the tablet hardware declines, remaining in strength with over 500,000 sales in 2015. There may be opportunities for MVNOs to challenge the competing MNOs as the range of low end tablets available to purchase continues to increase.
While contract tablet tariffs remain in strength, the large growths are seen within the contract dongle market. 2015 saw a ~120% volume growth vs 2014. The development of MiFi products has been a big catalyst of this trend. GfK hardware data shows a larger number of MiFi sales than traditional sticks in 2015 despite the additional cost attached. The localised hotspot created enables multiple devices to be connected which compliments the high ownership rate of tablets in the UK and increasing demand to use devices when out of the house. Additionally to the MiFi growth, new devices are being introduced to this space. Devices to get connected in the car and cameras that allow live streaming are being made available on mobile broadband plans and driving a growth of the contract dongle market. As the technology industry continues to advance and innovate there will be increasingly more potential for connectable devices to be sold alongside a mobile broadband tariff.
Will tariff or device innovation drive further growth?
But it is not just the device side which has caused such a large growth of the contract dongle market. Certain UK mobile networks are targeting existing mobile customers and encouraging the addition of these devices to current smartphone plan. These sharer plans make the mobile broadband tariff more affordable to the consumer and increase the simplicity of the purchase journey. Our weekly sales data shows how promotional activity is stimulating the Mobile Broadband market through bundled products and reduced up-front or monthly costs. High volume weekly sales periods are driving wider overall category and long-term market movements.
The opportunities for additional devices that can be connected are almost limitless. Our recent Consumer Panel survey result shows that almost 50% of people see Smart Home as a technology to have an impact on consumer lives. The development of this market will not only increase the number of connectable devices that can connect to a tariff, but also grow the necessity of being able to stay connected when out of the home. Virtual reality caused a splash at Mobile World Congress in Barcelona and is due to be the key device innovation in 2016. As endorsed by Mark Zuckerberg at the conference, the device creates opportunities for mobile connections and could be one of “the killer applications of 5G”. Elsewhere continued Quad play developments in the UK will bring the potential of a wider tariff variance in the market, highlighted by the recent emergence of sharer plans. The addition of 4G capability to MVNO offerings will open the door for them to enter this space and compete with the existing MNOs at the lower and higher price points, similar to what we have seen in the contract sim only market. In short the Mobile Broadband market has proved itself to be dynamic and there are a number of ways in which it can be developed further. Further growth will be led by both device manufacturers and mobile networks and there is clearly large value to be achieved.
Author: Lucas Staveley, Account Manager, Telecoms