This is not a typo. On a per gigabyte basis, mobile broadband can be up to 1333 times more expensive than fixed-line broadband, according to analyst firm, Market Clarity.
In a report titled The Cost of Mobility, the company compared the most expensive mobile plan per gigabyte with the cheapest fixed-line broadband plan per gigabyte to get such an alarming figure.
But even by comparing the cheapest post-paid mobile and fixed-line plans, there is still a huge discrepancy between the two types of services; a 27.7 times price difference to be exact.
This price gap has been exacerbated by the release of terabyte and unlimited plans which were all the rage last year.
“There has been a lot of talk about the National Broadband Network [NBN] and why do we need it because we have mobile broadband,” Market Clarity CEO, Shara Evans, said. “Mobile broadband is great but there are some limitations and one of the biggest one is price since usage allowances are really quite small compared to fixed-line.”
The exorbitant price of mobile broadband is not a new phenomenon in the industry. It is widely known that users pay a high price for the convenience of portable data service. But as tablets and smartphones gain popularity, the price imbalance will have a wider impact.
According to Market Clarity, there are more than 2700 DSLAM sites for fixed-line broadband and in excess of 14,000 base station sites for mobile broadband as of September 2010.
Considering each base station requires equipment, backhaul, purchasing of real estate and spectrum acquisition considerations. This sends the cost of deploying a wireless service through the roof.
A fixed-line service is much simpler and comparatively cheaper to rollout since it requires less sites.
All this coupled with complex engineering requirements means mobile broadband will always have a premium attached to it, according to Evans. But that doesn’t mean there is no room for prices to go down even though they are unlikely to be as low as fixed-line plans.
“As demand and usage goes up in terms of mobile broadband use, there should be cost benefits that accrue because of the nature of buying additional backhaul capacity in bulk,” she said. “Or if you deploy your own fibre, that fibre is there no matter how much traffic goes over it.
“Also, cost of putting a base station to a site will also cost the same irrespective of how much end users download from the site.”
Without a change in mobile broadband tariffs charged by telco carriers, there are very few solutions to remedy the pricing problem.
“But education and looking at comparisons of plans is a good first step,” Evans said. “Consumers need to make choices on which technology they use when and where.”