Mobile Broadband Growth Hits Major Slide

Mobile Internet service providers experience a precipitous drop in fourth quarter 2008 new subscriber growth, breaking a string of six consecutive quarters of double digit growth. A new comScore study also finds that PC data card usage actually represents a time-shift in Internet consumption rather than adding to overall use.

The economy seems to have taken a major bite out of the mobile PC data card business, with new subscriber growth plunging in the fourth quarter of 2008. According to comScore, the number of subscribers signing up for Internet connections through mobile ISPs was up by five percent over the third quarter, breaking a string of six consecutive double digit growth quarters.

Overall for 2008, PC data card Internet access grew at a robust 163 percent, following a 157 percent growth rate in 2007. But, the fourth quarter numbers represent a major softening in the growth rate.

"The PC data card market is clearly in the early stages of its adoption curve, with the overall number of subscribers multiplying in the past few years," Serge Matta, comScore senior vice president, said in a statement. "That said, we've observed a significant deceleration in subscriber growth during Q4 2008 coinciding with the economic downturn, an indication that mobile broadband service may still be seen by many as a luxury rather than a necessity."

Mobile broadband employs cellular telecommunication networks, with users paying subscription fees for access. The Internet connection is made using a PC card, built-in adapter or connections tethered to a cell phone or PDA. The connection is different than Wi-Fi, which depends on wireless hot spots, where access fees frequently are applied incrementally for each connection.

The comScore study also found that PC data card usage actually represents a time-shift in Internet consumption rather than adding to overall use. During the fourth quarter, PC data-card-only users spent 89 hours online while traditional hard wired Internet users spent 90 hours online. PC data card users who also use a wireline ISP spent 22 hours (approximately 25 percent) using a PC data card.

"That aggregate Internet usage via PC data card is not incremental to standard wireline Internet usage suggests that it's a valuable convenience feature for many Internet users," said Matta. "There are also certain segments with PC data cards that do spend additional time online, likely indicating that these segments see PC data card as more of a necessity."

Matta added that carriers seeking to increase PC data card subscriber growth should focus marketing efforts on the differing needs of Internet users and should consider "offering financial incentives in this tough economic environment if they hope to continue attracting new users."