Editor’s Note: With 2014 now upon us, RCR Wireless News has gathered predictions from leading industry analysts and executives on what they expect to see in the new year.
Wireless data will continue to grow at exponential rates, as will mobile data revenues (obviously): Atlantic-ACM forecasts that postpaid wireless data revenue will grow at a compound annual growth rate of 11.5% over the next five years. This data revenue growth will more than offset the wireless voice revenue decline, which will fall at a CAGR of about 8% over the same time period.
LTE network builds will continue across all carriers: To accommodate ongoing exponential growth in mobile data consumption carriers will upgrade and add macro sites. There also will be a continued push for Wi-Fi offloading and even some real world small-cell implementations on larger scales than the test cases we have seen to date.
Look for a number of new approaches to handset subsidies: With device lifecycles shortening, carriers will have to revise the way they structure subsidies and contract renewal incentives. Many carriers already offer one-year upgrade plans to accommodate customers that don’t want to wait two years to get the latest and greatest handsets.
Bring-your-own-device will become a more common carrier offering, particularly in prepaid: With customers regularly cycling out devices, some of which are only a year old, there exists a growing supply of used, high-end handsets to be sold, or refurbished and sold to users who don’t demand the latest models. With the mobile market saturated, carriers don’t want handset costs to be a barrier to entry for customers who might move onto their networks, so they will increasingly allow customers to bring used or aftermarket devices to their networks. This is especially the case in the prepaid sector, where fewer customers can afford the full price of a new smartphones (hence, the ability to bring used devices will be particularly appealing). Note that Sprint already is allowing its mobile virtual network operator partners to turn up used Sprint phones. While BYOD undeniably creates opportunity, it also will drive further price competition and churn as customers can jump from one MVNO to another on the same network with no device-cost penalties.
Smartphone penetration will continue to creep up: While almost 40% of Americans are still holding out and using feature phones, the availability of low-cost refurbished phones, lower-cost data plans and (as stated above) carrier BYOD adoption and genuinely valuable applications (such as those just beginning to emerge from the e-health realm) will drive more users into smart devices.
Machine-to-machine implementations will move forward rapidly, and M2M revenues will show strong, controlled growth: M2M has seen real world growth in 2013, particularly in the most obvious applications like fleet management and various automotive applications, but revenues have not been as explosive as some analysts predicted. As the current deployments demonstrate the value of M2M functionality, more companies and industries will employ similar measures. Additionally, as the price of integrating wireless functionality into consumer products continues to come down, the number of connected devices, and in turn revenues, will accelerate considerably. Watch for carriers to explore full M2M solution packages, including software and service management, to enterprise customers.
Over-the-top players will continue to displace carrier-supplied applications for basic services: If we can learn one thing from Apple’s iTunes and the app store, it’s that open platforms allowing anyone to develop applications will generate more, and far better, functionality than any one provider or software company could develop on its own. The penetration rates of some OTT apps are staggering and new and innovative offerings come out with regularity. Carriers have generally accepted that they can’t beat the OTT players, so I expect increased efforts from carriers toward working with major OTT players to optimize their applications to minimize network congestion.
Mobile security will become an increasingly significant concern: If the Duchess of Cambridge (aka: Kate) can be hacked, then how can anyone be safe? All kidding aside, with more banking and payment applications coming online and infinite applications coming from equally infinite and often unknown sources, there will be more serious incidents of losses due to failures in mobile device security. Soon, NSA analysts may not be the only ones monitoring your cell phone activity.
Fedor Smith is president of Atlantic-ACM, a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for Atlantic-ACM, where he oversees proprietary projects as well as the firm’s Carrier Report Card series, which serves as the telecommunications industry’s principle source of benchmarking tools.
