Mobile data traffic is soaring. This is due to the capped mobile data services now on offer in the market by Optus (Virgin Mobile), Vodafone and Hutchison ‘3’. By far the largest growth market will be in mobile email. With the benefit of uncapped prices customers will check their web mail more frequently and this will begin to effect SMS usage. Slowly but surely prices are coming down and opening up new mass markets.

In 2009 mobile broadband revenues could start to challenge SMS revenues and could reach the $1.5 billion threshold (this includes the hardware such as data cards, etc). Within this figure, we do include mobile media services such as ringtones, music, games, etc. The value of that segment has been growing very slowly over the last decade and within a year, the operators are already generating more revenue from basic mobile wireless access than they are from their mobile media portals.

Currently this is predominantly complementary revenue for the mobile operators; however it is expected that over time this will balance out when the mass market starts to kick in. By that time this revenue will change from complimentary to substitution. Also broadband is less developed in Australia than in other developed countries. Thus there is a relatively better business case for mobile broadband in Australia than in other countries.

However, wireless mobile is still a very small proportion of this mobile data. We estimated that in 2008 this was around 5% of this market. We also remain sceptical about predictions that wireless broadband could take over from fixed broadband over the next one to two years. Although prices have fallen over the last two years, this service still remains too expensive for the majority of the residential market. It certainly is taking off amongst the business market and the top-end of the residential market, particularly among professional people.

Also, it won’t be until IP-based Next Generation Mobile, based on more spectrum, becomes available, before we start seeing the development of mass market wireless broadband. While some relief is expected when Long-term evolution technologies become available, 4G which would have the bandwidth and the IP efficiencies is not expected until 2012-2015.