My crew have just released the 17th edition of our telecoms industry sizing and share study for the Stateside telecoms services markets, which includes forecasts through to 2015. Key findings from the macro perspective include continued data-for-voice substitution, wireline industry contraction and wireless industry expansion. Notably, we found that wireless growth will nearly fully offset wireline shrinkage, holding overall service revenues contraction to less than 1% per year.
With wireless penetration peaking, what is driving this massive wireless growth? Smart devices. Specifically, the iPhone device and other devices running the Android OS, and the competition they are sparking between each other as well as in the industry at large. These devices are the killer appliances that run the killer apps that are driving wireless data demand through the stratosphere, driving increases in wireless revenues even as wireless voice revenues decline. Presently, wireless voice usage generates double the revenues of wireless data usage. By 2015, wireless data revenues will exceed wireless voice revenues. Many carriers we work with have been planning for that tipping point with either organic development, mergers, or planned purchases.
On the wireline side of the industry, overall contraction is the result of the continued demise of voice in favour of data-driven solutions. As voice becomes just another application, its revenues decline. The tipping point is next year, when wireline data revenues will eclipse wireline voice revenues. Data revenues are growing on the wireline side of the fence but, unlike their wireless counterparts, are not sufficient to stem overall wireline revenue shrinkage.
Digging into the aspects of the industry that matter most to Capacity readers, these retail trends hold significant implications for wholesale operations. Notably, wireless data demand is at the heart of new industry fibre builds as carriers deliver backhaul support for multimedia content powered by the iPhone, Android-enables devices and their competitors (eg Palm Pre). Backhaul has been an important part of 2009/10 revenue growth and will certainly continue to provide opportunity in coming years.
When looking at wholesale wireline revenues in support of retail wireline operations, overall wholesale revenues will contract through the middle of the decade, but wholesale data products will deliver considerably greater stability than voice products. In fact, wholesale circuit-switched voice revenues will decline at a CAGR of -9.5% from 2009 through 2015 while wholesale revenues for IP and other data products remain relatively flat, netting out at nominal contraction at a CAGR of -0.6% over the same timeframe.
These shifts, although predicted, continue to provide management and leadership challenges in all companies in the industry. Finding the sweet spots for sales providing strong margins is an evolving challenge for telecoms.
Judy Reed Smith is CEO of Atlantic-ACM. She can be contacted at: judyrsmith@atalntic-acm.com
