The European Mobile Broadband Market

The European mobile broadband market is growing exponentially with demand fuelled by declining prices and improving performance. Berg Insight estimates that the total market value for devices and network services in EU23+2 reached € 1.1 billion in 2006, with shipments of PC-cards and USB-modems growing to 3.2 million units. Vendors’ Q1-2007 financial data indicated an increase in shipments in the range of 40-50 percent and a general price reduction of 20 percent. Until 2011, the mobile broadband market is expected to increase at a compound annual growth rate of 22.9 percent to reach € 3.0 billion. Device revenues are forecasted to increase at a faster rate than network revenues. While the expected high demand from the PC-industry will lead to higher shipment volumes, the vast majority of new subscribers will only be occasional users generating lower network ARPU.

HSPA and legacy standards are expected to remain the dominant network access technology throughout the entire period with a market share well above 90 percent. At the end of 2006, there were about 3.3 million active WCDMA/HSPA mobile connections in EU23+2, compared to less than a quarter of a million for all other technologies combined. CDMA450 has achieved some penetration in the Czech Republic, Romania and Scandinavia and will remain an alternative in areas without HSPA coverage. Deployments of HSPA in lower frequency bands is however likely to reduce the traction of EVDO on the European market in the longer term.

HSPA evolves rapidly as a technology, having advanced from peak data rates of 1.8 Mbps for commercial networks in early 2006 to 7.2 Mbps downlink and 2.0 Mbps uplink in the first half of 2007. Berg Insight expects the first deployments of 14.4 Mbps networks to take place on the European market in 2008. HSPA+ is anticipated to become available by 2009, doubling the maximum downloading speeds to 28.8 Mbps. Every upgrade diminishes the need for alternative high-speed mobile broadband technologies.

Berg Insight does not believe that Mobile WiMAX will have any major impact on the European market in the coming five years. Any successful alternative network service provider must overcome a number of formidable barriers. These include securing sufficient radio frequency spectrum, financing and constructing completely new infrastructure and finally gain a competitive edge against three to four established HSPA network operators, who by that time will offer network speeds of at least 14.4 Mbps at price points comparable to DSL. The prospects for FLASH-OFDM and other 802.20 standard technologies also appear relatively bleak. The technologies may penetrate a few countries, but will have a major disadvantage in lacking the international adoption of either HSPA, EVDO or even Mobile WiMAX.

The popularity of mobile broadband is starting to have an impact on the overall strategies of network operators in many parts of Europe. Having attracted 1.6 million subscribers to MCC, Vodafone and its affiliates have demonstrated the large commercial potential for PC Internet connectivity via mobile networks. Vodafone Germany was the largest provider of mobile broadband at the end of 2006 with 540,000 subscribers. Vodafone UK and Vodafone Italy also qualified among the top five networks with 220,000 and 140,000 subscribers respectively. T-Mobile Germany was estimated to be number two with approximately 240,000 subscribers. A1 Mobilkom also qualified for the top five with 140,000 subscribers - a very high figure considering the size of the Austrian market. In Q2-2007 the average monthly revenue for a customer using 400 MB per month was € 37.40 on the European market. High volume tariffs with data allowances of 3 GB or more were on average priced at € 48.20 per month. There are significant differences in pricing between operators, as well as markets. Greece, France and the UK have the highest overall price levels, while the lowest are found in Austria, Sweden, Hungary and Poland.

This report answers the following questions:

• What are the key drivers behind the adoption of mobile broadband in Europe?
• Which markets have the highest penetration rates and which are lagging behind?
• What are the critical success factors needed to gain mass-market traction for mobile broadband?
• Who are the leading providers of PC-cards/USBmodems and HSPA broadband network services in Europe?
• When will embedded mobile network connectivity become a standard feature in mass-market notebook PCs?
• How is fixed-mobile convergence and telecom service bundling going to affect the mobile broadband market?
• What are the real market prospects for alternative mobile broadband technologies like CDMA450 and Mobile WiMAX?

Executive summary

1 Portable PCs and nomadic devices

1.1 The European notebook PC market

1.1.1 Regional market trends

1.1.2 Vendor market shares

1.2 Other PC form factors

1.2.1 Tablet PCs

1.2.2 UMPC

1.3 Nomadic devices

1.3.1 Portable media players

1.3.2 Digital cameras

1.3.3 Portable gaming consoles

1.3.4 Personal navigation devices

2 Mobile network technologies

2.1 Evolution of 2G-networks

2.2 3G networks: UMTS/WCDMA

2.2.1 UMTS packet-switched bearer services

2.2.2 Session management

2.2.3 Network performance

2.2.4 Challenges and future developments

2.2.5 UMTS/WCDMA in lower frequencies

2.2.6 UMTS-TDD

2.3 Evolutions of 3G: HSPA, HSPA+ and LTE

2.3.1 HSDPA

2.3.2 HSUPA

2.3.3 HSPA+

2.3.4 LTE

2.4 CDMA2000

2.4.1 EVDO and UMB

2.4.2 CDMA450

2.5 Mobile WiMAX

3 Other broadband wireless technologies

3.1 IEEE 802.11 standard: Wireless LAN

3.1.1 802.11 standard

3.1.2 Market perspective

3.1.3 Hotspots

3.1.4 Municipal-WiFi

3.2 IEEE 802.16 standard: WiMAX

3.3 IEEE 802.20 standard and technologies

3.3.1 FLASH-OFDM

3.3.2 iBurst

4 Data terminals and notebook PC integration

4.1 Mobile broadband data terminal form factors

4.1.1 PC-cards

4.1.2 USB-modems

4.1.3 Embedded modules

4.1.4 Wireless gateways and modems

4.2 WCDMA/HSPA broadband terminal vendors

4.2.1 Option

4.2.2 Novatel Wireless

4.2.3 Sierra Wireless

4.2.4 4G Systems

4.2.5 AnyDATA

4.2.6 Digi International

4.2.7 Sarian Systems

4.2.8 Teltonika

4.2.9 TOPEX

4.2.10 Zadako

4.3 Handset and telecom vendors

4.3.1 Cisco

4.3.2 Ericsson and Sony Ericsson

4.3.3 HTC/BandRich

4.3.4 Huawei

4.3.5 Motorola

4.3.6 Nokia

4.3.7 Onda Communication

4.3.8 Siemens Wireless Modules

4.3.9 Telit

4.3.10 ZTE

4.4 Notebook PC and Tablet/UMPC manufacturers

4.4.1 Dell

4.4.2 HP

4.4.3 Acer

4.4.4 Toshiba

4.4.5 Lenovo

4.4.6 Fujitsu Siemens

4.4.7 Sony

4.4.8 Panasonic

4.4.9 Samsung

4.4.10 Others

5 HSPA mobile broadband propositions

5.1 Business models

5.1.1 Contract subscriptions

5.1.2 Pepaid subscriptions

5.1.3 Bundling with other telecom services

5.2 Pricing and conditions

5.2.1 Pricing

5.2.2 International roaming

5.2.3 Terms of use

5.3 Case studies: HSPA mobile broadband services

5.3.1 ONE: H.U.I. fixed-mobile-convergence service

5.3.2 Tele2: Bundling and flexible tariffs

5.3.3 Telenet: Bundling of fixed and mobile Internet access

5.3.4 TMN: Network speed tariffs and pan-European roaming charge

5.4 Alternative providers of non-HSPA mobile broadband

5.4.1 Digita @450: FLASH-OFDM in Finland

5.4.2 Digiweb: FLASH-OFDM in Ireland

5.4.3 Nordisk Mobiltelefon: CDMA450 in Scandinavia

5.4.4 Zapp: CDMA450 in Romania and Portugal

6 Operator strategies for mobile broadband

6.1 3 Group

6.2 Deutsche Telekom

6.2.1 Strategy for wireless broadband network deployments

6.2.2 T-Mobile HSPA broadband propositions

6.2.3 UMTS-TDD and FLASH-OFDM deployments

6.3 France Telecom

6.4 KPN Group

6.5 Telecom Italia

6.5.1 TIM mobile broadband propositions

6.5.2 Alice integrated fixed-mobile broadband offering

6.6 Telefónica Group

6.6.1 HSPA mobile broadband propositions

6.6.2 O2 Germany: Home zone mobile broadband

6.6.3 Telefónica O2 Czech Republic: Parallel CDMA450 and HSPA networks

6.7 Telekom Austria

6.8 Telenor

6.8.1 Scandinavian market strategy

6.8.2 Turbo-3G propositions on the Swedish market

6.8.3 WiFi partnership with The Cloud

6.9 TeliaSonera

6.10 Vodafone Group

6.10.1 Vodafone MCC

6.10.2 Marketing and pricing strategies

6.10.3 International roaming packages

7 Market forecasts and trends

7.1 European market summary

7.2 Device market

7.2.1 Vendor market shares

7.2.2 Form factor trends

7.3 Network service market

7.3.1 Regional market trends

7.3.2 Network technology trends

7.3.3 Service convergence trends

Glossary

List of Figures

Figure 1.1: Notebook PC shipments (EU23+2 2003-2007)

Figure 1.2: Notebook PC shipments and population (EU23+2 2006)

Figure 1.3: Notebook PC vendor market shares (Worldwide 2006)

Figure 1.4: Sahara Slate i200 Tablet PC

Figure 1.5: Shipments of nomadic devices (Worldwide 2006)

Figure 1.6: Examples of nomadic devices (Sony PSP and Dash PND)

Figure 2.1: Peak and average data rates in the evolution from 2G to 3G

Figure 2.2: 3G packet switch bearer service session management

Figure 2.3: Examples of UMTS-TDD deployments in Europe

Figure 2.4: HSDPA deployment status (EU23+2 June 2007)

Figure 2.5: HSDPA categories and throughput rates

Figure 2.6: HSUPA categories and data rates

Figure 2.7: CDMA2000 technology evolution path

Figure 2.8: CDMA450 licenses in EU23+2 (May 2007)

Figure 3.1: IEEE 802.11 standard evolution

Figure 3.2: Examples of municipal Wi-Fi projects in Europe

Figure 3.3: Examples of fixed WiMAX licenses and deployments in Europe

Figure 3.4: Examples of FLASH-OFDM and iBurst deployments in Europe

Figure 4.1: Share of EU operators offering principal 3G data terminal form factors

Figure 4.2: Examples HSPA mobile broadband terminals

Figure 4.3: WCDMA/HSDPA operator distribution agreements by vendor and form factor

Figure 4.4: Examples of Option WCDMA/HSPA devices

Figure 4.5: Examples of Novatel Wireless WCDMA/HSPA devices

Figure 4.6: Examples of Sierra Wireless WCDMA/HSPA devices

Figure 4.7: Examples of 4G Systems WCDMA/HSPA devices

Figure 4.8: Examples of Huawei WCDMA/HSPA data terminals

Figure 4.9: Top notebook manufacturers and their HSPA module suppliers

Figure 4.10: HSDPA enabled notebooks by vendor (May 2007)

Figure 4.11: Fujitsu Siemens HSDPA enabled notebook models

Figure 5.1: Comparison of HSPA data tariffs (Western and Central Europe, Q2-2007)

Figure 5.2: Examples of 3G data roaming packages

Figure 5.3: Examples of standardised 3G roaming charges

Figure 5.4: H.U.I. packages and pricing

Figure 5.5: Banda Larga mobile broadband tariffs

Figure 5.6: Frequency licenses held by Nordisk Mobiltelefon

Figure 5.7: ICE mobile broadband pricing plans (June 2007)

Figure 6.1: Estimated mobile broadband connections by operator (December 2006)

Figure 6.2: 3 Group mobile broadband tariffs (June 2007)

Figure 6.3: T-Mobile wireless broadband network deployments

Figure 6.4: T-Mobile Group mobile broadband tariffs (June 2007)

Figure 6.5: Orange Group mobile broadband tariffs (June 2007)

Figure 6.6: Orange UK Business Everywhere Max tariff

Figure 6.7: KPN Group mobile broadband tariffs (June 2007)

Figure 6.8: TIM mobile broadband tariffs (June 2007)

Figure 6.9: Alice Sempre integrated fixed-mobile broadband tariff (June 2007)

Figure 6.10: Telefónica Group mobile broadband tariffs (June 2007)

Figure 6.11: Examples of Telefónica O2 Czech Republic fixed-mobile broadband tariffs

Figure 6.12: Cumulative sales of 3G broadband devices (Mobilkom Austria 2005-2006)

Figure 6.13: Mobilkom Austria mobile broadband tariffs

Figure 6.14: Telenor’s Scandinavian subscriber base (Q1-2007)

Figure 6.15: TeliaSonera 3G mobile broadband propositions (June 2007)

Figure 6.16: Vodafone 3G MCC devices (Q4-2004-Q1-2007)

Figure 6.17: Vodafone MCC subscribers and revenues by market (2006)

Figure 6.18: Vodafone Group mobile broadband propositions (June 2007)

Figure 6.19: Vodafone Group MCC roaming propositions (June 2007)

Figure 7.1: Mobile broadband market summary (Europe 2006-2011)

Figure 7.2: Fixed broadband market data (EU23+2 2006)

Figure 7.3: Mobile broadband device shipments and revenues (Europe 2006-2011)

Figure 7.4: Estimated revenues and shipments by device vendor (Europe/World 2006)

Figure 7.5: Shipments of notebooks with embedded HSPA/LTE (Europe 2007-2011)

Figure 7.6: Mobile broadband subscribers and network revenues (Europe 2006-2011)

Figure 7.7: Average monthly fee for 500 MB+ mobile broadband service (WE Q2-2007)