What now for wireless?
September 19 2008 - 12:59 pm ET | Tracy Ford | RCR Wireless News
Last week’s upheaval in the financial markets certainly will impact the wireless industry, but in what ways and to what extent remains to be seen. Smaller startups may have a more difficult time getting credit or finding backers, and larger players may postpone some implementation plans. Even before the bankruptcy of Lehman Brothers and the federal government’s $85 billion loan to insurance behemoth American International Group, some VCs said they were holding off on cash infusions into wireless startups, although social-networking companies seem immune to reality.
But wireless services — used by businesses and individuals — may be trickier to assess.
It’s easy to speculate that in any long-term economic downturn, families will delay adding ‘tweens to their family plans, or get rid of unlimited text messaging in favor of plans that have caps — with safeguards so text-happy teens don’t go over previously set limits. Some families may drop data plans altogether, and I doubt a lot of people will be signing up for mobile TV. (Do you know anyone outside of the wireless industry who has signed up for mobile TV? Me neither.)
Service providers that target lower-income customers (think Leap and MetroPCS) may feel the credit crunch (which is ironic because their customers don’t need great credit to get service). Another “loser” could be the home landline phone. If voice on your cellphone is an essential service, a wired telephone in the kitchen may be a frivolous extra. If that’s the case, Verizon Communications and AT&T may end up seeing some pain as much as Leap and MetroPCS. Will T-Mobile USA, which its reputation as the service provider for the budget-conscious, gain market share?
Small- and medium-sized businesses will double check their cellphone bills, but I doubt they’ll drop them altogether. A business that has deployed wireless service likely has done so because it saves money, increases revenue or is a cost of doing business. However, decreased business may result in fewer employees using wireless, which would impact carrier revenues.
Having said all that, let’s hope we don’t have to find out how people change their wireless habits in a down economy.
September 22, 2008 06:11 am
Leap and MetroPCS focus on the cost conscious so they will most likely benefit. The Verizon user at $99 per month may realize that they can get away with a $25 all-you-can-eat voice plan from Metro. Also, have you seen the Leap financials? They are stellar and they just secured half a billion in credit for their expansion.
September 22, 2008 06:11 am
Why are we being spoon fed old European technology? The FCC should open up the old analog TV bands to unlicensed devices and let competition spur innovation. The only way to get out of a recession is to develop new compelling technologies that can be exported to other countries.
September 22, 2008 06:11 am
Nothing / no one is immune to stock market hurricanes. Will we survive this one? Probably. Will there be casualties? You bet. Bottom line, it would behoove us all in the telecom world to cross industry lines, band together with the rest of the country, and send a very strong message to Washington and the two presidential candidates that we are losing confidence in our financial infrastructure. Fix it or we're all screwed.
September 22, 2008 06:11 am
On the contrary, Leap & MetroPCS shouldn't feel a "crunch", they will do better. As people economize, they want to cut expenses, but not having a cellphone isn't an option. But if you can save $50 or more a month by switching to these guys to get unlimited service, that is a real savings of $600 a year that can't be ignored. Most people would utilize unlimited minutes & texts more than they need free national coverage. But if you are paying an extra $50 a month, every month, is it truly free??Both of these carriers have national roaming, they just don't make you pay for it unless you use it.