I hate to admit it, but during these troubling economic times I have succumbed to the cool, refreshing Kool-Aid the wireless industry is serving. And I gotta tell you, it tastes good.
Sure, nearly every company involved in the telecom space has seen its stock price plummet during the past several weeks, and that in turn is making executives running those companies nervous, but word from those who follow the segment is that most of that panic is unwarranted. Their reasoned arguments claim that if push comes to shove, consumers are more likely to ditch their wireline phones than their wireless devices.
And I am buying that argument. What person in their right mind would give up the mobility afforded by cellular service and go back to the limitations of wireline service?
This would appear to be good news for carriers that rely on recurring revenue from customers to continue their continued expansion and fill their (in some cases) overflowing coffers with funds.
Those recurring revenues could see some retrenchment if consumers realize they really don’t need to watch television on their cellphones or play World of Warcraft on their mobile device, but that decline could be offset by an increase in voice minutes that consumers could select to offset a disconnected landline phone. I don’t think people will cut back on their texting, so that revenue-booster should remain.
There might be some contraction for handset vendors as consumers might put off purchasing a new device for a few more months, which in turn could put off consumers extending their contracts with their current operator. This could come back to haunt carriers in the long term if these customers do manage to refrain from plucking a new handset tied to a carrier subsidy and contract extension through the end of their current contract – thus letting them become a wireless free agent.
This is more of a concern for carriers that have customer-retention issues, but spells opportunity for others. And if a customer moves to a new carrier, he or she is likely to purchase a new handset and return that smile to the face of device makers.
So, I say drink up, because even if the ride is a little bumpy, at least your thirst will be satiated.
Oh Yeah!
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