So when all of them made the decision to go pay-per-meg data caps did they not realize that people were going to move to means that were cheaper and faster for doing things outside of checking facebook and making a call? Did they really think that american consumers, at a time of recovering recessions, would just enjoy paying more money on top of what they might be already strapped short for?
If we really wanted to just give away money to our wireless carriers why not just give the money instead to programs in the US to help bring up employment here? Let me look into that on my phone here, from this FREE hotspot.
AT&T, Verizon and Sprint—as well as every other wireless player on the planet—are betting they can squeeze more revenue out of customers due to booming demand for mobile data. The fly in the revenue growth ointment may just be Wi-Fi.
In a research note earlier this week, a team of Jefferies analysts made the case that Wi-Fi will squeeze the pricing power for mobile data. The issue boils down to this:
- We all know wireless data traffic is exploding.
- On the surface it makes sense that carriers would benefit.
- However, Wi-Fi serves as a substitute for wireless coverage in many cases.
- If Wi-Fi is viewed as a direct substitute then data revenue streams will be hurt.
Is this wireless router a threat to mobile data pricing?
Jefferies also noted that 65 percent of wireless data usage happens indoors and that benefits Wi-Fi. In addition, carriers don’t add value to data traffic generally speaking.
Toss in the fact that public Wi-Fi hotspots are going to grow exponentially and you can offload a lot of that 4G and 3G traffic—and the charges that go with them—to Wi-Fi. Meanwhile, switching to Wi-Fi is generally seamless on most phones today.
Jefferies said in a report:
The current conventional wisdom is that Wi-Fi is a clear complement to mobile operator networks. Given the growth in mobile data traffic, Wi-Fi off-loading – whether to a carrier controlled hotspot or a public hotspot – is generally viewed as a positive development, as it reduces the load on the already heavily taxed carrier networks. However, we believe there is increasing evidence that Wi-Fi could ultimately be viewed as a threat to the mobile operators.
To be clear, we are not suggesting that Wi-Fi could somehow supplant the mobile carrier networks. Nor do we argue that Wi-Fi will not or should not (from the point of view of the mobile operator) shoulder a large part of future data volume growth. Rather, we observe that, with penetration levels in the US and Western Europe well above 100% of effective users, industry revenue growth expectations largely hinge on ARPU expansion. In our view, there are enough data points and anecdotal evidence to suggest that Wi-Fi could eventually impact the ARPU growth story negatively for the wireless operators.
That argument makes a lot of sense. Network quality, security concerns and traffic growth could minimize the Wi-Fi damage, but overall the Jefferies case sounds plausible.
As for winners and losers, AT&T comes out ahead since it owns the most Wi-Fi hotspots. BT is also building out Wi-Fi connections. Clearwire and Vodafone were seen as losers on the carrier side. On the hardware front, Cisco, Ruckus Wireless, Aruba Networks, Broadcom and Qualcomm are likely winners if Wi-Fi grabs mobile data traffic.
