Archive for July, 2006

For the last three years I have sat in this chair, read voraciously and tried to predict what the near term future of this convoluted industry might look like two or three years out. Having no fear of publicly making an idiot out of myself, I have published these projections here and elsewhere for all to read knowing full well that if I am wrong, I will hear about it – and I have been wrong more than once.

That’s why when I read something that seems to corroborate what I believe from a credible source I tend to react with a small bit of pride along with a healthy dose of trepidation knowing that whatever source I have found could also be just as wrong as I have been at times.

Perhaps this is nothing more than the old adage that misery loves company…

Yesterday was a red letter day for me in this regard as two different credible sources seem to have backed up what I have been saying for quite some time now! If we were to take either of these reports separately they would show some pretty interesting trends which might indicate some serious changes are coming down the pike but when read together the real impact of what this wireless revolution is about to wreak on our society.

As you’ve heard me say before, VoWiFi is going to cause the Cell Providers some discomfort. This article from Cellular News paints a mixed picture as it discusses how the cell phone industry might be able to leverage the License Exempt wireless infrastructure.

“This trend is likely to occur globally as operators seek to increase roaming usage as a boost to declining voice revenues. Visiongain believes that price reductions by operators will succeed in driving usage, allowing operators to tap into the 95% of subscribers who currently do not use roaming services whilst abroad.

VoIP through Wi-Fi will become an increasingly attractive alternative to mobile voice calls whilst roaming due to the disparity in price. Visiongain found that a typical voice call whilst roaming over Wi-Fi costs $0.02 per minute, compared with a typical cost of $1.25 per minute through mobile.

The increase in Wi-Fi hotspots world-wide is creating more opportunity for travelers to utilize VoIP services, therefore threatening mobile roaming revenues. In addition, visiongain believes that Nokia’s entry into the Wi-Fi market with its converged GSM / Wi-Fi handset, the 6136, is significant because it legitimizes the technology’s entry into the mobile handset market.”

Now, you do need to understand that this article is written with a European perspective in mind so there is certainly a differential in pricing to be taken into consideration. However, the message is the same, cell phone providers are going to have to modify their pricing structure and this is being driven by the UMA (unlicensed mobile access) end of the industry.

I also found this short article that provides a little more information about the Nokia 6136 courtesy of Engadget.

While we are looking at the pioneers taking their first steps into this new field, the ramifications of what this will do to an industry that cannot withstand an onslaught like this, financially speaking, is going to be pretty interesting to watch unfold.

Well, where might this push the cell phone industry to pick up new revenue? There is the move to deliver “LiveTV” to mobile users as I wrote about here. But there is also the newest wrinkle being used in Japan dubbed the “Mobile Wallet” which may also help the cell phone providers – if they don’t get beaten out by the WiFi industry first.

Okay, one down and one more very powerful one to go.

Next week, there is going to be a study released by Broadband Advisory Services (Pike and Ficher) that states, “City-run broadband networks could eventually cut into commercial service provider revenues by as much as 48%” which no matter how you look at it is going to change the landscape dramatically.”

This report can be purchased here.

The question remains, what happens when large corporations that do not have 33% profit margins see a significant decrease in their revenues? Even more to the point, what happens when the cash cow (as defined by the densely populated areas of our country) migrate away from their very expensive services due to the introduction of less expensive equivalent services? At what point does their business model suffer? More importantly, at what point does their business model cease to be able to sustain itself?

I guess well find out.

Hang in there, the opportunities are coming at us faster than we can recognize and react to them.