Why Mobile Data is More Expensive Than Broadband

mobile data vs broadband

Mobile data vs broadband – Same internet access, different prices

You’ll find a lot of service providers in Australia offering you mobile data and/or wired broadband. Both options will get you the internet access you need, but why does mobile data cost more?

Although you can access the internet via mobile data or fixed line broadband, they’re really two very different technologies. Their differences have a lot to do with the cost differences. They also have their individual benefits and drawbacks, which contribute to whether their cost differences are worth the value to you and your needs.

Most wired broadband offers give you the option of unlimited data or high caps, and guaranteed minimum speeds. But you won’t find any truly unlimited data mobile plan in Australia, and if one eventually appears, it’ll be extremely expensive. The closest we have so far will cap your speeds to 1.5Mbps when you exhaust your plan data – clearly nowhere close to fixed broadband speeds.

So why does mobile data cost more than fixed broadband? Read on to find out.

Mobile data vs broadband: Benefits and drawbacks

The benefits and drawbacks of mobile data and broadband are important to determine their value, and whether the price differences are reasonable. While mobile data costs more, it gives you some unique advantages over broadband. On the other hand, broadband has its advantages as well, but they may not be enough to make you get rid of mobile data completely.

Here’s a side by side comparison:

 Mobile DataBroadband
Plan costsMore expensive than broadband.Less expensive than mobile data.
Data allowanceCapped, but Telstra and Vodafone offer endless data, which cap your speeds at 1.5Mbps after you exhaust your data allowance.Unlimited in many cases.
Installation costs and setupNo installation costs. Plug-and-play; easy setup process.There may be installation costs and wait times, and setup might be complex.
MobilityVery mobile, flexible. You can take your data device anywhere and use it wherever your provider has coverage.No mobility. You can only use it where it is installed - home, office, etc.

Reasons why mobile data costs more than broadband

Mobility and easy, plug-and-play setup isn’t enough to explain away the price hike on mobile data over broadband. Yes, those are great benefits, but broadband’s unlimited data is a great benefit as well, but yet their plans remain cheaper.

The main crux of the price difference lies in technology costs. While both technologies will get you online, they take very different routes to get there. Here’s a look:

  • Spectrum licensing costs
    Before a telco can build mobile data technology, they have to make use of the wide range of frequency out there. The problem is that spectrum isn’t free – it is licensed and allocated, usually by governments. That licensing is typically done through auctions and bids in the millions and even billions of dollars. This creates a high cost barrier to entry, which is then passed down to the customers.
  • Infrastructure setup costs and maintenance
    After being granted spectrum, a telco faces other high infrastructure and setup costs. They must build many base stations throughout the country to ensure coverage for customers. This includes everything from real estate for the base stations, back haul, the spectrum cost itself, as well as frequent maintenance. Broadband, on the other hand, has low infrastructure set up costs and maintenance because they do not need many base stations.
  • Qualcomm patents
    Qualcomm holds patents to a lot of mobile network technology, including EV-DO, WCDMA, HSPA. Telcos and mobile phone users need these technologies to be able to use mobile data, which means they must pay licensing fees to Qualcomm.
  • Upgrades
    Mobile network technology experiences many, many upgrades. For instance, the latest generation is 5G, which will require new infrastructure and a whole new rollout. Even when the rollout is complete, there will be frequent upgrades to make the technology better. These upgrades are very expensive for telcos, which results in costs getting passed down to customers.

In Summary

Mobile technology costs telcos a lot of money – more than broadband. These costs are reflected in the costs of mobile plans as telcos try to recoup their expenses.

While both internet solutions will get you online and connected, their benefits and drawbacks clearly target different needs. If you’d like to use your data on the go, mobile data is the best option. If you’re a heavy data user while at home or at the office, then broadband is the way to go. In many cases, customers opt for both mobile data and broadband, taking advantage of the strengths of each to overcome their weaknesses.

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.