Study: Wireless Carriers Face Stiff Competition

Report predicts Wi-Fi could take an $8 billion chunk out of wireless carriers' revenues by 2016
Publish date:

If the FCC is concerned about the major wireless carriers becoming too powerful in the broadband delivery space where it expects most media to be delivered -- and it clearly is -- a new report from The Cambridge Strategic Management Group might help assuage some of those fears.

According to the study, a variety of factors, from over-the-top voice competition to Wi-Fi operators are helping "shift value away from established mobile industry players." It predicts that Wi-Fi could take an $8 billion chunk out of wireless carriers' revenue by 2016.

The report, Signal Strength: Assessing Value Shifts in the Mobile Telecommunications Industry, says "established players can no longer rely on the rising tide of demand to guarantee growth," given tablets, cloud-based services and other disruptive factors.

In fact, the report cites a host of threats to the view of incumbent wireless carriers as poised to dominate the market and the bottom line, arguing that one way to defend against over-the-top services like Skype is to offer unlimited voice and messaging.

Here are some of those threats.

  1. Over-the-Top Threat: Mobile service providers face potential value erosion from over-the-top voice and messaging substitution.
  2. New Entrant Threat: Disruptive new mobile service providers may capture share from incumbents.
  3. Mobile Data Traffic: Mobile data traffic growth will challenge service providers' network capacity and data profitability.
  4. Smartphone Profitability: Late adopters of smartphones will be less profitable to mobile service providers than earlier adopters.
  5. Mobile Content Proliferation: Mobile service providers are being disintermediated from mobile content as third parties capture a disproportionate share of value."