Market Insight

CTIA 2015 – New life for mobile Hotspots

September 23, 2015

Gerrit Schneemann Gerrit Schneemann Sr Research Analyst, Smartphone

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CTIA 2015 – New life for mobile Hotspots

At CTIA 2015, AT&T and ZTE breathed fresh air into the mobile broadband hotspot form factor with the Mobley device. At the same time, both companies are extending the sphere of the connected car to existing vehicles with no pre-existing connectivity modems.

Key Points

  • ZTE Mobley is a mobile hotspot which connects to a car OBD II port for power.
  • AT&T gives older vehicles basic connected car feature with Mobley.
  • AT&T drives for higher Average Revenue Per Account (ARPA) by making new device Data Share plan eligible and limiting standalone data plan options for it.
  • Differentiating the monthly access fee for connected devices can drive demand.

Analysis

Announcement Details

The ZTE Mobley hotspot is powered by a Qualcomm MDM9215 chip and can provide WiFi connectivity to five devices. Since the hotspot plugs into the vehicle’s OBDII port, it is powered as long as the car is also powered on.

The device connects to AT&T’s LTE network and can fall back to 3G UMTS data speeds where LTE coverage is not available. WiFi standards 802.11 b/g/n are supported.

AT&T is positioning the device as an add-on data connectivity device for existing customers, who are able to add the Mobley to a shared data plan for $10 per month, just like other connected devices. The device retails for $100 off contract, or is available for free with two year contract. AT&T offers two data plan options, if the device is not added to an existing data bucket: a DataConnect plan with one GB of data for $20 per month and three GB for $30 per month.

Mobile Hotspot forecast

IHS predicts that global shipments for hotspot devices will grow from about 4.5 million units in 2015 to 12.6 million units in 2019. Growth will come Asia Pacific and Central and Latin America. For wireless carriers in North America, where the market is predicted to remain flat over the forecast period, hotspot devices will need to fill a different consumer use case compared to geographical growth areas to stay relevant.

Potential

For wireless carriers, the connected car has been an important market over the last few years. Hotspot devices like Mobley allow carriers to provide a semi-embedded connectivity solution for vehicles which were not build with the necessary hardware on board. Since the Mobley plugs into the OBD II port, it can provide the same always-on experience as an embedded solution.

While cars can already be added to shared data plans on some carriers with some OEMs, ZTE’s device allows AT&T to push the connected car use case, and its shared data plans, to drivers of non-connected cars.

Clearly, AT&T is pushing customers to add a device like ZTE Mobley to an existing data bucket. The only two independent data plan options, for one or three GB of data per month, limit the usefulness of the device, if five WiFi devices are attached to it for any extended period of time. AT&T can drive subscribers to upgrade to larger data buckets as it is successful in increasing the number of connected devices per account.

For users, the advantages of a dedicated hotspot have not changed since the form factor was first introduced, but probably have increased in importance. As the screen size and quality of smartphones has increased and fast networks make rich media consumption comfortable, the strain on the device battery has increased. A dedicated device lets users run a hotspot without depleting the battery on the primary device.

In the way of significant traction for devices like the ZTE Mobley, or other hotspots, is the price associated with adding devices to a shared data plan. Currently, most devices require a similar monthly fee to share data. However, some devices require less data to be functional, while others are designed to consume a lot of data. Both devices cost $10 per month at AT&T. Differentiation in the connected device segment will allow carriers to on-board more devices overall and make the mobile hotspot a viable add-on device.

 

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