It was certainly a good week to be the CEO of a wireless carrier as Rogers, Telus and Nextel reported strong subscriber and operating profit growth. CEOs are enthused about pricing stability, strong ARPU, and the growing prospects for data services beyond early cash-cows such as ring tones, screen savers and e-mail.
Not to be a party pooper but the question I have to askt is: how long will/can the wireless party last? As penetration rates climb to 50% in Canada and 60% in the U.S., how much longer can carriers depend on subscriber growth to fuel revenue and profits? My guess-timate is the really good times will last another three to five years in North America. At that point, penetration rates will be pretty deep so the industry will have to look other ways to grow.
Clearly, the industry is counting on data to be a fertile opportunity. E-mail usage - highlighted by Blackberry and Treo users - is just scratching the surface. When you think about it, wireless e-mail should be a mainstream service rather than something only embraced by senior executives. Rogers, for example, is already thinking about the future with a licensing deal with Visto, which will give Rogers a way to go after consumers not willing to pay Blackberry prices.
There is no doubt wireless carriers are counting on music as another growth play. Look at the deals signed recently between Nokia and Microsoft, and Motorola and Apple. Not sure how the whole wireless music game will be played but it has huge potential if you consider the size of the wireless and music markets. I'm sure both industries are salivating over the possibiity of mobile device users walking around listening and downloading music - for a convenience premium, of course.
The other piece of the wireless growth puzzle - and the one that will jump-start all kinds of other services - are high-speed networks. When UMTS, EVDO, etc. became the norm, carriers will try to pump out kinds of high-value services down the pipe to consumers. The big question is what kind of services will consumer buy beyond voice, e-mail and games? It may be a matter of getting the networks in place, and then figuring out how to capitalize on the power of higher speeds. Look at how high-speed Internet access service is starting to help realize the potential of e-commerce and e-services on the Web.
Call me a worry wart about wireless growth or perhaps a voice in woods but the great times will not last forever. At some point, the growth paradigm and competitive dynamics will change. For those who don't adjust strategically, watch out.
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