Changing Wireless Market Revenues

My firm, ATLANTIC-ACM, is currently analyzing data for U.S. Telecom Wired and Wireless Sizing and Share: 2011-2016, the latest edition of our market sizing and opportunity study. The study will include a variety of wireless market data. Here’s an early snapshot of wireless industry revenues.

The macro revenue growth trend we have seen over the past few years will continue. Overall revenues will grow slowly and will increasingly be driven by growth in data subscriptions and higher data spending. Voice revenues, on the other hand, will continue to decline at over 5 percent annually for the next five years. Prepaid competition has put a dent into the postpaid subscriber base, and while most postpaid subscribers will pay a premium for faster, more reliable data, the voice prices carriers can demand will continue to decline.

Another factor that will drive down voice revenues is the move to IP-based solutions. As more reliable VoIP applications find their way onto smart devices, and 4G becomes increasingly available, more customers will opt for the versatility and FMC functionality enabled by IP voice options. This will help to further the next competitive arena of data speeds.

While customers are willing to pay more for reliable data, they are increasingly going to be speed sensitive when it comes to mobile broadband. With carriers and application providers both promoting cloud services for mobile, the efficiency of handled devices will become directly tied to the data speeds of the networks over which they run. If the voice and cloud applications that users run are bogged down by lackluster network performance or limited 4G coverage, customers will look to other carriers. 

Continued growth of smart-device penetration, data heavy applications, and multiple device ownership will continue to drive up the volume of data consumed by each customer, but as multiple 4G networks come on line, data price competition will heat up again and revenue growth will suffer in the long run. Unless one of the large carriers can achieve true differentiation when it comes to data speeds and reliability, data will become commoditized in the same manner mobile voice has been, and it will again become a price game.

Overall, mobile spending on a per-customer basis should stay strong in the postpaid arena. Many of the more budget-conscious consumers have or will move to prepaid, while those who consider mobile a mission-critical part of their life or business sill still pay a premium for high quality service. 

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.