原创 Wireless Carriers – What next?

There is a major transformation underway in the wireless services industry!

Recently, Google launched a new US wireless service (see http://www.reuters.com/article/2015/04/22/us-usa-google-wireless-idUSKBN0ND27O20150422) that automatically switches between Wi-Fi and cellular networks. Through this step, Google effectively became a wireless service provider, albeit a very tiny one since the service is available on a single device and with limited carrier coverage.

Then, there is Freewheel from freewheel.com that offers unlimited data, text, and voice through the millions of Wi-Fi hotspots in the New York area. This service is currently limited to the Wi-Fi network of a single cable operator, Cablevision, based in the US, but this could well be the start of an accelerating trend. As the technology to switch between hotspots improves and the density of hotspots continues to improve in big metros, the adoption of such lower-cost services is likely to increase, further denting the growth in revenues for traditional wireless operators.

At the device level, Apple started shipping a carrier-neutral Apple SIM in iPad Air 2 and iPad Mini 3.  This may be inconsequential in the short-term because very few tablets today (<20% according to Cisco VNI Mobile, 2015) actually have a cellular connection but it could have a very different implication if the Apple SIM found its way into iPhones. Consumers will then have the option to select the cheapest network and the carriers will have to complete for customers in real time, leading to lower prices.

Smartphone applications, on the other side, have give rise to the over-the-top (OTT) messaging services such as iMessage from Apple, WattsApp, Facebook Messenger, and others. This is only going to reduce the relevance of SMS, a very profitable business for wireless operators today. Although this change may not yet occur for several years, SMS will likely become limited to specific applications such as two-factor authentication (TFA) and application-to-person (A2P). 

With the explosion in mobile data traffic, cellular operators have already shifted their business models to mobile data from mobile voice. The challenge for operators is: what percentage of the data traffic goes over their own cellular networks or over their own Wi-Fi hotspots instead of the free Wi-Fi networks that offer no revenue opportunity? 

In consumers mind, the wireless network is very much becoming a commodity (just consider the move to no-contract, no-subsidy model from T-Mobile US and the model already popular in most other countries) and the value has moved to the smartphone / application providers.  To prevent this commoditization, Verizon acquired AOL in June to get into services and content market and AT&T is acquiring DirectTV (the acquisition was recently approved, according to the Wall Street Journal) for the same reason.

What would these wireless carriers look like tomorrow?