T&A: Consulting firm Ovum has released a report forecasting that users accessing the Web via mobile broadband-enabled notebooks and handsets will grow at a rate much faster than the growth in revenues (measured in terms of average revenue per user, or ARPU) by 2014.

While mobile broadband revenues are expected to grow by more than 450% from 2008 to an estimated rev of US$137 billion in 2014, users will surge from 181 million today to over two billion by the same period — a 1024% increase. It is estimated that among the two billion, 258 million users worldwide will be accessing mobile broadband services through notebooks via the popular USB-based modems, datacards and integrated mobile modules.

The biggest finding perhaps is more geographical in nature, as the research firm estimates the most aggressive growth to come from emerging economies, particularly in the Asia Pacific region, where infrastructure is lacking and fixed broadband is either unavailable or too expensive. There is also the large mobile user base in China and India, thanks to the high adoption of 3G. In China alone, it’s been estimated that there will be 52.5 million laptop users as opposed to 325 million handset users — a ratio of 6:1.

While user growth is understandable, the projected erosion in revenues is due to several factors:

• The less wealthy segments of emerging markets will be the target for mobile broadband user growth.
• Prepaid tariffs to spur adoption among mature mobile and fixed broadband markets will dilute ARPU.
• The increase in competition among mobile broadband service providers will drive prices lower.

One solution suggested by providers to arrest the erosion is to supplement the ARPU decline with value-added services, but there isn’t any compelling proposition that would make this a viable option today. Not only that, taking a cue from what the fixed line broadband markets have gone through before, it’s a business model that can be extremely risky, and perhaps even dangerous.

It is also noted that by 2014, network quality is going to be an important service differentiator in the impending mobile broadband wars as different service providers jostle for your mobile broadband dollar.