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.