Articles by Mark Lowenstein
Usually, industry analysts such as myself wait until December for the annual ritual of "predictions" columns. But there is enough of import happening in the industry that I think it will be of some value to Fierce readers to take stock of where we are as of mid-year, and to think about what the next 6-9 months look like across the mobile landscape.
A familiar refrain among consumers is that cellular, pay TV, and broadband are overpriced. But if you take a look at the cost of providing some of these services, plot them against demand and usage patterns, and consider some of the unique aspects of the North America market and geography, a different picture emerges. So here's my take, in terms of what looks reasonable from the perspective of the consumer, and service providers' requirement to operate a viable business.
We all expect 5G to be one of the major themes at Mobile World Congress 2016 next week. Even though 'actual' 5G is still years away (and less than half the world isn't yet on 4G), we are in a period where discussions are intensifying, R&D dollars are being directed, operators are starting to announce trials, and the standards bodies are starting to do some serious work on the issue. So far, much of the discussion is industry-centric, as in, us talking to ourselves.
Late last year, in the middle of a "wireless 101" presentation to a consumer packaged goods company, somebody stuck their hand up and asked what "EICIC" stands for. I was stumped. Or maybe I didn't sleep well the night before. No, I was stumped. Wikipedia to the rescue. But this got me to thinking that yes, there are lots of silly and over-the-top (does OTT apply to that?) acronyms in our industry. For a consultant like me, acronyms like EICIC are actually a good thing, because I can sound smart by simply remembering what EICIC stands for, rather than actually knowing what it does or how it really works.
It's that time of year again: my annual 'themes and predictions' column. Overall, spectrum, network capacity and security will take center stage. There will be some breakout categories in IoT. And it will be somewhat of a 'pause' year in the consumer device and wearables category.
Christmas has come early for wireless customers and Santa's stocking is stuffed with lots of free data. We are in the midst of the most aggressive fourth quarter/holiday season customer grab that I can remember. T-Mobile started things on Nov. 10, with the doubling of data (and accompanying price increase), and the Binge On video offer. A week later, Sprint announced a promotional plan, offering customers 50 percent savings on their prevailing rates with other carriers if they switch by Jan. 8. T-Mobile, clearly concerned, is offering customers unlimited LTE data for three months, $200 porting credits for Sprint subscribers, plus a grab bag of other goodies.
Here's an idea for a new operator tagline: "The most consistent wireless network." OK, so I won't win a CLIO. But as banal and unlikely to be adopted as that adage sounds, it's going to be the most important measure of a user's wireless network experience going forward. What do I mean by 'most consistent'? Well, when you think about it, when the cellular network is at its best, data performance is about as good we need it to be: 20 Mbps (and as much as 50 Mbps), latency around 50 ms, and even dramatically improved voice quality when the stars line up for a rockin' VoLTE/HD Voice call.
We have operated under the assumption for many years that spectrum is a scarce resource, sort of like high-priced housing markets where demand outstrips supply of 'buildable land'. Carriers pay billions of dollars for a precious few megahertz of additional capacity. Pricing of data services, still hovering at $8 per GB, sends a "use the network but not too much" type of message. The projected growth in video usage has us running to Wi-Fi. Fifty percent of the valuation of Sprint and Dish Network is attributed to their spectrum assets, while conversely, Wall Street analysts are bearish on AT&T and Verizon because their share of subscribers far outweighs their share of aggregate network capacity.
As of mid-2015, in my view, we have an upside down industry structure. In wireless, there is almost too much competition. Margins at Verizon Wireless and AT&T are shrinking. Sprint is unprofitable and continues to struggle. T-Mobile has been successful in taking share and setting the tone of the industry to take share, flirting with profitability from one quarter to the next.