Ovum has long been skeptical that 5G would severely cannibalize fixed broadband services. Now we are putting our "money where our mouth is," backing up this statement with forecasts. Based on recent research into 20 tier 1 countries, Ovum forecasts that the proportion of mobile-only households – those that do not have fixed broadband but only use connected mobile devices for all their data requirements – will rise by 14 percentage points to over 30% of households globally between 2017 and 2024 (see Figure 1). Mobile-only growth will be strongest in emerging markets with slow or stagnant fixed broadband network coverage but affordable 3G, 4G, and eventually 5G services. At the same time, consumer fixed broadband penetration will also rise – but at a slower rate – to reach 50% by 2023. More than 80% of the world will have internet access by 2024, up from 60% in 2017.
Source: Ovum. Note=20 Tier 1 countries
Fixed–mobile substitution is occurring as the mobile pipes get larger and data becomes cheaper. But Ovum's consumer survey work in developed markets found that the mobile-only consumer is not the average telecommunications user. Mobile-only customers tend to be millennials and often students living in multidwelling apartments. Ovum's Digital Consumer Insights: 5G and the Mobile-Only Consumer report highlights that more than half of fixed consumers surveyed have unrealistic expectations of mobile data allowance and/or the savings they can achieve, ruling them out as "realistic" cord-cutters.
The mobile-only story is fundamentally about the household, not the individual. Many households will have at least one mobile-only family member. But incentives for the entire household to cut their fixed broadband cord will not increase dramatically, if at all, over the next few years. This is because
In short, the fixed broadband community is not standing still; just as the mobile pipes are getting larger with 4.5G and 5G, so too are the fixed gigabit pipes, ready to accommodate more data-intensive home broadband services.
For integrated operators, the obvious way to stay ahead of fixed–mobile substitution will be to keep increasing fixed broadband speeds, and ensuring quality of experience with lower latency, especially for gamers. Also, we are seeing an emerging trend in many markets toward fixed-mobile bundles, as operators attempt to lock up the entire household with connectivity and content (for more information on next-generation bundles, see Ovum's Broadband Bundle Subscription Forecast: 2018–23).
In developed markets, mobile-only provides the best growth opportunity for mobile operators and MVNOs, and their suppliers. But that doesn't mean that integrated operators should not target the mobile-only consumer, possibly via a mobile sub-brand, with SIM-only or prepaid offers, for instance. The vast majority of mobile-only customers will be brand new to the internet; as customers, they are a segment no operator can afford to shun.
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