3 broadband booming

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Speaking at a media round table, Russell claimed more than a million Brits would be using mobile internet via their laptops by the end of the year. He also revealed since 3 launched its mobile broadband offering late last year, data traffic on its 3G network has ballooned 14-fold.

That incredible leap shows the potential of mobile broadband, but also the risks.

Emeka Obiodu, European telecoms analyst at Global Insight, pointed out fixed-line broadband providers are already receiving negative press for stinging consumers with excess charges for unwittingly exceeding fair usage policies when they download TV shows via apps such as BBC’s iPlayer.

“Given the increasing acrimonious debate between ISPs and media outlets such as the BBC, network capacity will become an issue soon,” wrote Obiodu. “If fixed-line broadband providers with their ‘unlimited’ usage offers are complaining now, mobile operators will have more of a problem dealing with capacity issues later on, especially in their backhaul infrastructure.”

Russell’s figures also provided new evidence of the threat posed to fixed-line providers such as BT by mobile networks, as they roll out high speed 3G networks.

Wireless modems have proved popular with students, travelling businessmen and people with second homes.

“We have definitely seen some customers taking mobile broadband as an alternative to fixed-line,” added Russell.

Some customers in good coverage areas have reported surfing is a comparable experience to broadband, but Russell admitted the connection was not always as fast or reliable.

“I don’t believe mobile broadband is as good as fixed… I’m not going to bang a drum and say mobile will replace it,” he added, perhaps conscious the more people that sign up to wireless broadband, the slower the connections could be.

Nevertheless, more than a fifth of 3 UK’s new contract customers are purchasing dongles.

And more than 823,000 wireless modems have been sold across the 3 Group of companies, which spans the UK, Italy, Australia, Hong Kong, Denmark, and Sweden.

“While the technical abilities of mobile broadband will continue to lag behind fixed, continued refinement, better pricing and increased awareness will ensure mobile broadband will grow steadily across the world,” wrote Obiodu in a note.

Russell also sees opportunities for 3 to exploit mobile broadband to push services such as voice over IP (VoIP), email and instant messaging to give it a head start over its much larger rivals. “Email, VoIP, instant messaging – these are areas we will push hard,” said Russell. “[These are] communications services that go around the [traditional mobile voice and text] regime, so they are appropriate 3 targets.”

Whether the strategy will be enough to get 3 some true scale is another matter, unless it makes the business more attractive to a potential buyer.

Verwaayen steps down

Ben Verwaayen, described as the ‘father of broadband Britain’, is stepping down at BT, where he has been chief executive for more than six years.

His departure is not wholly unexpected, but the timing took many by surprise; the BT mouthpiece was indicating privately only recently that there were no such plans.

It’s the end of an era for the former phone monopoly, whose fortunes were transformed by the Dutchman, who most people in the City had never heard of when he was hired to sort out the mess at the company in 2002.

Back then, BT had no dividend and £30 billion of debt; now it has a meaty dividend and £10bn of debt. But, to Verwaayen’s irritation no doubt, the shares have lost the gains they enjoyed in 2006 and early 2007 and are back near the levels they languished at when he joined.

That is largely because investors are unsure the company can continue on the growth path Verwaayen had appeared to have put it back on, until the last two quarters of disappointing numbers.

Verwaayen’s replacement is Ian Livingston, currently chief executive of BT Retail, who becomes chief executive of the whole group on June 1. As former BT finance director he was by far the best qualified internally to succeed Verwaayen.

But he faces a huge challenge, especially as he and BT chairman Sir Michael Rake have vowed to continue with Verwaayen’s strategy. That means BT will not be buying a mobile network to replace Cellnet (now O2) – Livingston was quite clear on that subject.

However, he did express an interest in doing more with WiMax technology.

BT’s entry into new markets in recent years has been mixed at best. Its Fusion phone is no longer being marketed to consumers, while BT Vision is struggling to gain traction against Sky. And that’s before considering regulatory pressure on Openreach and the struggle of BT’s Global Services unit to hit Verwaayen’s challenging 15per cent margin target.

At least Verwaayen has left BT a happier place than it was, and staff with a sense of pride.

How long will it last, I wonder.

 

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