As Tablets Drive Wholesale Demand, Wireless Carriers Should Incentivize Wholesale Carriers to Build Wide and Deep

It’s been less than a year since Apple introduced the iPad, and it already has sold as many of them as there are people in the Netherlands. And its momentum is growing. Nearly half of its users – a Switzerland’s worth of them – subscribed last quarter. For all those who joked that the iPad is an oversized iPhone without the phone, Apple’s getting the last laugh. And so are the many competitors that are following along its tablet-market-creating wake. 

For the wholesale side of the telecom industry, the explosion of tablets translates to the proverbial “doubling down" on investment in support of wireless growth. As discussed in my column last fall, “Wireless Demand, Data Growth Driving Industry Toward Key Tipping Points," wholesale investment in today’s telecom industry is largely in support of wireless demand.  Smart devices sit at the center of this demand, and tablets promise to pump the digital equivalent of nitrous oxide into wireless data demand engines. Demand for apps, bigger, cleaner and faster streaming (HD video eats up 5X the bandwidth of regular video), interactive gaming, and vertical industry solutions … the list is long and very familiar to those involved in telecom. However, the greatest driver of future demand may not have even have been invented yet. 

In last month’s column, we discussed the results of my firm’s latest Global Wholesale Carrier Report Card, and that wireless wholesale customers are generally more satisfied than their wireline counterparts. However, from years of following this customer group, I can assure you that their opinions are not set in stone, and could easily swing back in the other direction. Pressure from consumers can pass right through to carriers, and since tablets are deployed in addition to, not in place of, smartphones, the potential for industry supply (read: networks) to fall behind the adoption curve is significant. It’s a given that carriers will continue to wage wars on quality, as well as price, for the foreseeable future. And all signs point to consumer willingness to pay for better connections.

In real terms, this equates to significant ramp-ups on the carrier side of the equation. Wireless carriers would be well advised to assist wholesale carriers in securing their joint futures. Backhaul providers are scrambling to get fiber to towers so wireless carriers can keep up with growing bandwidth demand, but a lack of sound guidance on where they should build is causing inefficiency that could have long-term service and price implications for all of those farther up the value chain. Wireless carriers and wholesale backhaul providers are in this together, and should be mutually supportive of one another to drive growth on both sides of the business. 

Fedor Smith is president of ATLANTIC-ACM , a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for ATLANTIC-ACM, where he oversees proprietary projects as well as the firm's Carrier Report Card series, which serves as the telecommunications industry's principle source of benchmarking tools.