Jeffries: Wi-Fi may inhibit mobile ARPU growth

Investment bank Jeffries came out with a research note last week that suggested mobile carriers might want to be careful how much they open their networks and customer bases to Wi-Fi. The research predicts that growing Wi-Fi usage by mobile customers is eventually going to put mobile carriers in a pricing bind at a time when they are looking to increase average revenue per user.

Is Wi-Fi competitive with mobile broadband or complimentary? That's now a question of constant debate in the industry, but what else is new? It's the same question carriers have been asking themselves for years.

Initially, the answer was that it was competitive enough that carriers for the most part didn't want smartphones to have Wi-Fi connectivity. That attitude may have begun to change as carriers realized that consumers would need both to have a seamless broadband experience, and that Wi-Fi could actually aid traffic management. Yet, as Wi-Fi only continues to become more popular and more available without the cost or limitation of mobile broadband, we may be ready to see the prevalent attitude swing back toward viewing Wi-Fi as competitive.

If consumers continue to use Wi-Fi as a substitute for mobile broadband, either to avoid mobile usage fees or because Wi-Fi offers better coverage on some situations, mobile carriers could have a hard time raising prices even as the world goes increasingly wireless. Jeffries noted something that should be obvious but that many of us probably take for granted--65 percent of wireless data usage happens indoors and that benefits Wi-Fi.

Jeffries said that is just one of the factors leading them to believe that Wi-Fi could become a greater threat to the mobile industry. The firm went to pains to clarify that they were not suggesting that Wi-Fi could completely replace mobile broadband networks-only that Wi-Fi could negatively impact mobile industry ARPU growth. That could be enough for the mobile industry to once again sound the alarm against the intruder.

For more:
- read this ZDNet post

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