Wireless Industry Maturing

CEDAR KNOLLS, N.J. -- The wireless industry is maturing and changing, and, correspondingly, wireless carriers must take a hard look at spurring capex and increasing revenue streams, according to Probe Group. Its reports indicate that subscriber growth for the wireless industry has slowed, due, in part, to a significant number of users substituting some wireless calling for wireline while, at the same time, the number of wireless minutes is rapidly increasing.

Of the Big Six wireless carriers, AT&T Wireless, Nextel and T-Mobile are the only ones not affiliated with a landline carrier, and, therefore, they are less concerned with wireless replacement of landline usage. Probe vice president Lynda Starr suggested, "It is in these carriers' best interests to take that wireline base as part of their subscriber and revenue bases." Carriers with both landline and wireless—Sprint, Verizon and Cingular—are seeing 5-10% of customers having cut the cord and a corresponding decrease in minutes of use. Said Starr, "They are not just moving subscribers from one pocket to another, but are losing to wireless competitors with national footprints. Consequently, network upgrades are priorities for these carriers in order to increase coverage and gain revenues."

Starr reports that there is increased use of wireless data services that are propelling the need for advanced networks and greater coverage. "Although the U.S. has lagged Europe and Asia in use of data services, users here are catching up." However, obstacles to signing on customers to data services include lack of understanding of new, unfamiliar applications and power consumption. "Downloading movie trailers and other streaming video requires a great deal of battery power," said Starr.

Probe's data shows that in 2003, growth in wireless services will come from such applications as multimedia messaging, which encompasses multiplayer games and taking and sharing digital photos. Multimedia messaging capabilities need to complement existing text messaging services rather than steal from the earlier technology's current customer base. Other major applications will include e-mail, web browsing and personal information management (PIM) applications. Voice will also remain an important wireless application, as the majority of usage is for voice.

In its latest U.S. Competitive Service Markets report, "Wireless Obstacles and Opportunities," Probe details 3G deployment status for the Big Six wireless carriers, including their financials, technology, recent initiatives and an assessment of their overall activity. An overview of regulatory issues, 3G migration and Wi-Fi as related to the industry in its entirety is also presented.

Probe Research Inc.