BOSTON-The future of wireless reselling is based on the resellers’ ability to realize economies of scale, provide a wide scope of services and achieve brand awareness, according to a recently published report by the Yankee Group.
Titled “Wireless Resale: Is There a Future?,” the report estimated the wireless resale industry generated about $500 million in service revenues in 1995 and grew to $1.1 billion by the end of last year. The group further forecasts the wireless resale market increasing to more than $4.5 billion by 2002.
The growth drivers for the industry are competition and capacity. The Yankee Group believes carriers competing in larger markets will target less saturated market segments, a traditional reseller strategy. The only way resellers can compete with carriers, then, is to offer more bundled wireless services. The report names CLECs and second-tier long-distance carriers as those likely to pursue wireless resale most aggressively.
The Yankee Group said that increases in average subscriber minutes of use could offset decreases in the average subscriber bundled price per minute, allowing resellers to sustain their margins and their business models.
However, the group said it expects a lull in the growth of wireless resale in the next two years, which will weed out inefficient resale operations. To battle this, resellers will need to build scale in purchasing airtime and units at volume discounts, provide a scope of both wireline and wireless services and brand themselves well to fortify image (perhaps by consolidating), the report said.
The Yankee Group said it does not believe digital resale will be a factor because low charter digital retail pricing has stolen the resellers’ previous value add to the customer, and the high cost of digital handsets discourages resellers from offering the service in the first place. Also, carriers are working to strengthen their branding of digital services and do not want to confuse the issue by offering resale.
