Now looking at the year in hindsight, I think we can safely begin to breathe a sigh of relief. As it’s turned out, while service providers deferred capital spending, and that hit suppliers, their own service revenues escaped fairly unscathed from the recession.
Rather than cutting back on communications services, people might instead go out to dinner and a movie less often or save on other areas of their lives. With today’s ubiquitous all-you-can-eat packages, it’s not like you can just decide not to call your friends as often to save a few bucks. You’re all in with your voice calls, texts, data and everything else, and with communications being viewed as a key lifeline, people are not so quick to pull the plug anymore.
So while the airlines and retail shops have been badly hit, telecom sails on. There’s still the specter of a ‘W’ shaped recession of course, but it looks likely that service providers will start to ease their capital and operating freeze a bit in the New Year.
Mobilizing the Future
But even before the recession struck, there were some worried faces in service provider boardrooms around the world. Not that we should feel too sorry for a $1.4 trillion business, but the problem is lack of growth in mature markets. Outside of high growth mobile markets like India and China, the only bright spot for saturated markets has been mobile data. 3G ‘dongle’ plug-ins to PCs and the almost single-handed engine of the iPhone have driven mobile data market up around 11 percent. The growth of app stores and a pre-Christmas flurry of new smartphone releases make mobile data something that at least keeps hard bitten telecom shareholders from shorting the stock.
While mobile data is interesting, and will continue to be a hot area going forward, it’s not service providers who are really driving the market. They are a consequence of a very interesting change in behavior of users around the iPhone and the app store model. The growth of app stores is so enormous that it’s causing significant headaches for operators who are supplying the iPhone. And once Apple unbundles its exclusive deals with operators – for instance by next year in the UK, Orange and Vodafone will be offering it alongside O2 – all that new data traffic will really tax their networks.
