Sound Off - Industry players discuss the economic downturn's impact on the wireless industry

Here's what members of the wireless industry are saying about the current economic crisis and its likely impact on the wireless industry.

"I've heard some people refer to wireless services almost like they do coffee. It's the Starbucks mentality--even if there's a recession, people are going to pay for coffee and they're going to pay for wireless. We saw what happened to Starbucks, that hasn't really worked out for Starbucks and they have had their problems. I think there will be similar repercussions on the wireless front. If the economy starts going into a tailspin, parents probably aren't going to want to spend a lot of money on all these services for their teenagers. What happens when the money runs out to support their mobile Facebook and mobile MySpace and all the new applications that they're using? You may see a little bit of a hold-up.

"On the other hand it will probably open up a bigger opportunity for those operators who are focusing on costs: operators who are focusing on all-you-can eat data packages or all-you-can-eat voice packages. Or operators that offer things that are going to save people money whether they're FMC solutions that promote really cheap calling within the house or big buckets of minutes. Anything that's going to save you money will probably be their focus." --Peter Jarich, research director, Current Analysis

 

"I can't predict the future. The real question is what will happen further in the economy in future months vs. what has happened in the past few months. We've seen some economic impact in recent months but not a dramatic impact. We see it more on the business side where particularly [with] banks we have fewer subscribers...with wireless service.

"On the consumer side what's happened in the last five years in this country and is probably the case in a lot of other countries as well is that wireless has become a staple. There's a recent survey that showed that people would rather give up their TV or give up their Internet access before they'd give up their cell phone.

"We're relatively fortunate compared to other industries. We believe we're more insulated. We're not completely insulated but we're more insulated. "There will be some customers that will be looking for perhaps a phone with not as many bells and whistles and instead of the $99 plan they'll be looking at the $79 plan or $69 plan, but that's what I'd call a minor issue. The larger threat in telecom is wireline. Wireline five years ago used to be the "have to have" and wireless was the luxury. That has flipped and in terms of the industry there's a lot more concern among wireline carriers than wireless because when customers look at their bill if they have both they're more likely to cut the cord than their wireless service.

"I don't want to lead you to believe there's no impact on us; we're looking at our expenses very closely, monitoring the situation very closely, monitoring store traffic very closely. We think there will be some impact on our business but compared to most other industries we're relatively insulated.-- Dan Hesse, CEO, Sprint Nextel at XOHM Launch in Baltimore

 

"The economic situation isn't impacting us today in light of the fact that we have $3.2 billion coming to us when we close this deal. Now, we have been candid that that's not enough for us to build out the entire country but we can also decide how quickly or slowly we build out the country. We intend to be able to weather the storm and there is a storm right now in the financial markets.

"In terms of other operators, the big guys are cash flowing nicely. I think the industry will weather this storm OK and will be better off than other industries that are more cash-strapped." --Ben Wolff, CEO of Clearwire, during his keynote interview for FierceWireless' The Future of 4G virtual event.

 

"There's good and bad news. The good news is, for most people their cell phone is their primary phone. I think from a basic service point of view there's more risk to the landline phone in the home than there is to the mobile phone. If you start to cut back spending, you're going to ask: do you really need these two telephones? And you say 'no, I really don't need that landline phone.'

"The bad news is that I could also look at my cell phone bill and say, ‘Do I really need those ringtones? Do I really need those games? Do I need that unlimited messaging subscription? Do I need that data package? And do I need that new shiny phone?'

"I think the basic services will be OK but the discretionary spending is what's going to be under threat. People also are going to start to look at the basic value of the service and say, 'OK I get dropped calls here every day [and] they still haven't fixed it after three years. Why am I paying these people money when I can go to Company X?' The basic quality and value of the services gets scrutinized more." --Iain Gillott, president, IGR Research

 

"It's going to take a little bit of time for us to find out if the wireless industry is affected by the downturn. Where we could see it affected, for example, is in the lengthening of handset replacement rates. People replace their handsets now on an average of every 1.7 years. That could become less frequent.

"We could also see fewer customers who are willing to go off-contract and buy phones at full retail price. They will wait and buy phones at the subsidized price in conjunction with a contract renewal with the carriers where they get the full benefit of the subsidized device.

"We could see also some real changes in handset purchasing patterns and even some of the price points of smartphones that we're seeing today are a bit of reflection on the state of the economy where's there's less appetite for $400 devices, but devices that are priced at $200 seem to be hitting a sweet spot with customers in the market for smartphones.

"I think we can also see, and you even see it right now with some of the recent device announcements for the holidays...carriers are beefing up their offerings at the lower end; very good, capable phones but the kind of phone you can get for under $50 for a subsidized price.

"If this downturn appears to be protracted...some of the 'nice to haves' rather than the 'need to haves' will be impacted. 'Nice to haves' might be a data plan, mobile applications or mobile content. I don't think people are going to give up their wireless phones. I don't think they're going to give up their subscriptions. They might go to a more economical subscription and they might start to think more carefully about some of those extra little luxuries like getting an extra ringtone or subscribing to a higher end data plan or even subscribing to a broadband access-type service on a 3G network.

"If that starts to happen, we may see a slowdown where major wireless operators are scaling back their capex budgets for 2009 and they might not roll out 4G networks as aggressively. It might be difficult for operators to get the credit facilities that they need for the various types of cap ex that's required, whether it's improving the coverage of their 3G networks or building out 4G or WiMAX or any flavors of next generation network evolution." --Mark Lowenstein, managing director, Mobile Ecosystem

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