Skip to main content

Wi-Fi may slow subscription wireless service growth

Fears that wireless carriers will become too large and powerful in coming years are unfounded, a new study predicts, arguing that Wi-Fi technology may take $8 billion from the revenue of wireless carriers by 2016. This will keep carriers like AT&T, Verizon and Sprint from dominating the use of wireless spectrum.

While most media delivery will certainly be delivered via some type of broadband service in the near future, the study by the Cambridge Strategic Management Group says the FCC should not worry too much about wireless carriers becoming too large and powerful.

The research found that a variety of factors, including over-the-top IP-based voice services as well as Wi-Fi operators are helping “shift value away from established mobile industry players.” The report, entitled Signal Strength: Assessing Value Shifts in the Mobile Telecommunications Industry, states that “established players can no longer rely on the rising tide of demand to guarantee growth” from portable devices, cloud-based services and other disruptive factors.

A host of threats to incumbent wireless carriers, the report said, are set to take over the market in the years ahead—including over-the-top voice and messaging substitution. One way to defend themselves, the report said, is for carriers to offer their own over-the-top services like Skype for unlimited voice and messaging.

Disruptive new mobile service providers may capture share from incumbents, and mobile data traffic growth will challenge service providers’ network capacity and data profitability, the report said.

Late adopters of smart phones will be less profitable to mobile service providers than earlier adopters, the report said, and mobile service providers are being dislocated from mobile content as third parties capture a disproportionate share of value.