As we begin a new year with the thought of explosive growth in Broadband’s many faceted uses with mobile leading the way, operators will be looking at new ways to capitalize on consumer and business demand. 2012 will usher in the era of connectedness in speeds, multiple device access, new applications, content and cloud storage as companies and consumers rush to broadband uses anywhere, anytime, on any device with continued discounted pricing.
Mobile Sees Unparalleled Demand
With the gauntlet of mobile demand surpassing capacity service providers will look for ways to counter the onslaught to their networks with tiered pricing, usage based billing, or pay as you go, to manage network demand. Companies which choose not to continue aggressive upgrades in back-haul networks will feel the brunt of slowed speeds and customer defections. 2012 signals a time of lower profit margins for operators as SMS continues its move toward Facebook, Google and other like applications which control consumer costs, while network providers continue to see increased bandwidth demand, and serious upgrade costs to satisfy insatiable consumers especially in larger more concentrated markets . Mobile operators will continue aggressive marketing campaigns that offer value added incentives to keep existing customers and add new ones.
Price points will remain low even though the move to higher bandwidth charges will be in the mix while consumers will become disenfranchised with usage based billing keeping price points even lower. Competition will be fierce as more devices including Smartphones’, IPad’s, and Netbooks from Dell, HP, Apple and other manufacturers continue to saturate the market. Sprint and T-Mobile will likely see a proposed marriage since each needs a partner to compete against the giants like AT&T and Verizon. We could see such a scenario take place in 2012 even though the synergies are not as compatible as each would like. Regulators are likely to look more favorably on such a merger since each need some kind of merger to realistically survive in a larger is better business environment. See ( Mobile carriers: Five predictions for 2012 | Signal Strength – CNET …)
Cable Continues to Struggle with Customer Erosion, Partner’s with Competition
Cable operators will be faced with continued erosion of their traditional Cable TV services as OTT services like Netflix, Apple TV, and Google TV will take a larger share of the video pie in 2012. Smart TV’s will lead the way in this paradigm shift as consumers see easier interfaces in connecting to non-traditional venues for content. Cable Operator’s decision to partner with Verizon’s robust network for quad-play services will lead to more acceptance of (one-stop shopping) if cable can transfer this advantage to their bottom lines. However, without a substantial restructure in price packaging, and a realistic customer service revamp, the loss of existing customers will continue significantly on the Cable TV side. Operators will look to Cloud based services to enhance their platforms in countering or possibly partnering with competitors in OTT markets. See (Deloitte: 9% have cut cable, another 11% are considering it)
Verizon on the other hand will be reselling cable’s broadband and video services in its retail stores. An unlikely paring of fierce competitors, where both see good synergies in partnering without spending enormous capital to build-out their own infrastructures. Since building out its expensive fiber network Verizon may be looking to save needed capital by competing with Netflix and other OTT’s over any broadband provider without having to build-out new plant. Cable’s TV Everywhere does create some advantage, especially with the content library which Comcast brings to the table with NBC Universal. But again without the attractive pricing, enhanced customer service, and ease of access as being seen with Netflix and others, the industry might as well hand customers to their competition.
Broadband Rolls on to Greater Coverage
Broadband’s march to increased coverage of the domestic landscape will continue as companies rush to take advantage from the myriad of applications becoming available on a multitude of devices. Upgrades in Ethernet based fiber will continue at a brisk pace as the increase in content based demand hits an all-time high. However, wireless solutions will dominate these upgrades to underserved markets where landline build-outs continue to lack the economic payback for such investments. Partnerships in ISP providers will dominate the landscape as operators look to enhance their access to new markets and greater customer households. “Stability has returned to the telecommunications industry and with the continued shift to wireless and cloud-based services we are forecasting strong revenue growth in the managed and outsourcing services segments,” says Fran Caulfield, Research Director for Insight Research.
Legislators will Demand more Spectrum from Broadcasters
With the unprecedented nixing of the AT&T/T-Mobile merger in 2011 by regulators ushered in a new era of increased scrutiny on monopolistic horizontal partnerships, therefore blocking deals which seem egregious to competitive forces. Still AT&T and others need additional spectrum and quickly. The FCC will take up this mantra and move forward to recapture unused spectrum held by broadcasters. The commission has long lobbied for additional mobile spectrum and will continue its goal to get the job done, with or without broadcaster approval. Legislators will be asked to approve various broadband mergers as companies jockey for position to stay relevant in markets dominated by much larger players, such as the possibility of a Sprint/T-Mobile vs. AT&T and Verizon in the mobile market.
2012 will be about continued strong demand for mobile/wireless services. Mergers will arise with smaller operators working to partner with like companies to counteract the market domination of a few players. Content demand will be strong the broadband spectrum especially for OTT operators and across all devices. Cable Operators will have to rethink their market strategy to compete with the underlying forces causing defections of customers. Privacy and Piracy will be a top agenda for legislators as the growth of broadband worldwide continues to put strains on accessibility, and control of an Internet economy.