* Predictions for the future of wireless carriers, cable and more
Telecom rung out 2004 with a couple of major deals in the wireless space: Sprint/Nextel and Cingular/AT&T Wireless. Two examples of dramatic consolidation in our industry that pundits say is necessary to move both the industry and the economy ahead.
So what can we expect in 2005?
More of the same, according to consultancy Booz Allen Hamilton’s annual year-end review and new year preview:
* The realignment of the industry will accelerate with further wireless consolidation and potentially some purchases of IXCs or regional players.
* Wireless players will move further into the center of the U.S. telecom industry, getting close to 30% of voice traffic, and experience “explosive” growth in data.
* Cable will make further inroads into traditional telecom, forcing an ever-more-decisive response from the RBOCs.
* Bundled services will become more central to the sector and will force providers to reorganize away from a traditional product-centric approach.
* Disruptive players will accelerate their presence in the market enabled by excess capacity and new technologies that will make it difficult for incumbents to arrest their entry.
I’ll go a bit further: Cable companies will become mobile virtual network operators (MVNO) by forging partnerships with facilities-based wireless operators to fill in the missing pieces in their bundled service offerings. I also think there will be consolidation among cable multiple system operators (MSO) – Adelphia selling off its assets is the obvious one. But some smaller MSOs will be swallowed up as they cannot survive in the increasingly competitive and expanding market, and major players look to increase their footprint and penetration into RBOC territories.
Underlying all of this board-game maneuvering is the simple fact that U.S. telecom is a mature industry facing new demands and new competitors.
“The fundamental reality of U.S. telecom is that it is a stagnant industry with intense price deflation, growing competition and an impending threat of technology disruption,” Booz Allen Hamilton states. “Moves by the leaders to consolidate their positions have slowed, but not arrested, the tide of change. For incumbent local carriers, the old foes of yesteryear have given way to adjacent competitors from wireless and cable, and will ultimately usher competition from entrants such as Yahoo, Intel or Microsoft, with pockets deep enough to threaten already razor-thin margins.”
Should auld acquaintance be forgot and never brought to mind?
