Some 35.8 percent of U.S. homes did not use or buy fixed network telephone service during the first half of 2012, an increase of 1.8 percent since the second half of 2011, according to the latest survey and report by the Centers for Disease Control.
In addition, 15.9 percent of U.S. adults received all or almost all calls on wireless phones despite also having a fixed network telephone service. CDC does not that the rate of substitution has slowed to 1.8 percent over the first six months of 2012. CDC says that is the slowest rate of increase since 2008.
At current rates of change, in about a decade, about 70 percent of U.S. adults would be “wireless only.” Globally, the shift to wireless for voice is even more pronounced, for obvious reasons. In much of the world, there is not a choice of networks. If one wants to make a phone call, and use voice, it will be on the mobile network.
The shift to mobile forms of voice service also corresponds with a shift of household spending on voice, Internet access and video services. Since 2001, spending priorities have shifted to mobile, Internet and video, as fixed voice spending has dropped, according to Chetan Sharma.
Researchers at the International Telecommunications Union and Pyramid Research likewise believe the same basic trends will occur.
Over the 2000 to 2014 period, fixed voice subscriptions will decline by 50 percent, while mobile subscriptions will grow by 100 percent. Those statistics rather logically raise the issue of service provider strategy. In some parts of the Internet ecosystem, a “mobile first” strategy is touted, generally meaning that app development has to work primarily in a mobile context, though not exclusively.
For some access providers, the strategy is better described as “mobile only.” That might fit T-Mobile USA, for example, which does not provide retail fixed network access services. AT&T and Verizon Wireless are more properly said to be “mobile mostly,” as most of the revenue earned by those firms is from mobile services, even though each firm continues to earn significant revenue from fixed network services.
“Mobile never” is a way of describing the way many competitive local exchange carriers, rural telcos and data centers actually make their money, which is to say, customers buy services on the fixed network, not a mobile network.
Cable companies, on the other hand, are “mobile sometimes,” acting as distributors of third-party branded mobile service, but not operating their own networks or branded services, at least for the moment.
For many firms, “mobile also” is probably an accurate way to describe positioning. Vonage and Skype provide examples of that strategy.
The point is that there are a range of valid “mobile” strategies service or application providers can take. Access providers generally have the more-expensive more-difficult decisions to make, since there are serious, on-going capital investment, operating cost and resource allocation considerations.
For many application providers, “mobile also” involves some design and scripting effort and expense. But even when specific mobile apps are not created, the mobile Web means virtually all apps are used, frequently, in a “mobile” context.
For access providers (telcos, cable, satellite, ISP), mobile strategy is an expensive but strategic choice, given the relative shift to wireless and mobile access globally.
The value of a fixed network might change, though. Fixed networks always should have significant advantages for high-bandwidth point-to-point applications, compared to any other type of network.
The precise amount of advantage for point-to-multipoint applications, such as linear TV, is debatable. Satellite might hold a cost advantage over and fixed network broadband delivery if the sole application is point-to-multipoint services.
The analysis becomes more complex if a mix of point-to-multipoint and point-to-point high-bandwidth services will be sold, and if adoption of those services is light to moderate.
At high adoption rates for a mix of high-bandwidth services, a fixed network will tend to have the advantage in dense urban areas with a substantial percentage of “middle class” consumers. In less dense areas with smaller percentages of middle class consumers, wireless will tend to have the better economics.
Yet other economic choices are feasible when a mix of services of low to moderate bandwidth, with little to no demand for point-to-multipoint apps, are to be provided to less dense areas with low percentages of middle class consumers. “Mobile always” or “mobile mostly” might be a rational strategy.
The tipping point in such areas might well hinge on demand for high-bandwidth apps, where either satellite or mobile cannot provide bandwidth at the required end user price points, creating a window for fixed wireless alternatives.
Those sorts of on the ground conditions will dictate mobile strategies, from “mobile always” to “mobile never.”
by Gary Kim
Gary Kim is an active industry writer and analyst, editor of Mobile Marketing & Technology, Content Marketing News and Carrier Evolution. He is a frequent contributor to IP Carrier and TMCnet, and a good friend of Razorsight. Keep up with all his industry insight — follow him on Twitter @garykim.