3G Wireless Modems See 'Phenomenal' Growth

Mobile workers are increasingly using 3G modems for their laptops, according to new data from ABI Research.

The new report, entitled "Cellular Modems And Mobile Broadband Connectivity," said growth has been "phenomenal," and the market is expected to swell from $3 billion in 2007 to $22 billion by 2013. Additionally, sales of cellular modems grew nearly 300% from 2006 to 2007.

"Customers want mobile broadband experiences like those provided by their PCs, meaning they want the fastest devices," said Dan Shey, ABI's principal analyst, in a statement.

Wireless carriers like Verizon Wireless, Sprint, and AT&T already have established 3G networks that they continue to increase the coverage area. T-Mobile just began rolling out its high-speed mobile broadband network this year, and it has aggressive expansion plans.

The growth in cellular modems will be primarily driven by business customers, as an average 3G data plan costs about $60 a month. Additionally, cellular modems face competition from cell phones with 3G connections that can be tethered to a laptop.

But Shey said tethering will have limited appeal for users with high-data needs because of the power drain on the handset. The carriers are also facing a delicate balancing act in terms of pricing, Shey said.

"Any operator can drop the price for mobile broadband using the phone as the modem, which is more amenable to a broad customer base regardless of world region," said Shey. "But the questions remain: How will this pricing change detract from use of the phone for other revenue-generating services? Does it perpetuate the perception of the operator as the 'dumb pipe'?"

There are also a growing number of laptops that feature built-in 3G modems. Shey expects this market to grow especially as multiple-mode radios proliferate, and removes the concern of being locked into a specific carrier for the life of the laptop.