Thursday, December 15, 2011

6M Are Wireless Only

New study out about the cord cutting consumers.

By the end of 2011, 6.05 million US households will depend on a wireless or mobile platform (including 3G or 4G) as their only means of accessing the internet, according to research just published by the Strategy Analytics Service Provider Strategies program. This represents 6.9% of total US broadband connections—and a 430,000 net increase over 2010 levels. These “Mobile-Only” customers typically connect to broadband using 3G or 4G-enabled smartphones or PC dongles, and are unable or unwilling to use a wired broadband service such as cable, DSL or fiber.

Cable is winning the broadband war. DSL is shrinking. Mobile is increasing, At least according to this study.

Remember that this is a consumer (residential) study. This will have impact triple-play bundles. It will also seriously affect the revenue of telcos in 2 ways.

One: they spent all these billions to get into TV - the least profitable service in the bundle - at a time when content charges are increasing, killing off profit and customers. Instead of trying to win the phone/Internet war, telcos wanted it all - despite the partnerships they already had with DBS companies (DISH + DirecTV).

Two: more data only usage of the 3G/4G network will require more and more investment in network, spectrum, towers and backhaul. Cellcos are finding that ARPU is not increasing at the same rate as investment and maintenance of the cellco network. Plus most cellcos - especially VZW and ATT - have lost all the wireline revenue of the wireless-only customers. Revenue that was almost pure profit since the network was paid for.

What's the future of DSL? Who knows really. Can the ILEC's just let the copper go to waste? Frontier, FairPoint, Windstream, Cincinnati Bell, TDS and CenturyLink can't. The RBOC's might, but I'm not certain that they have a plan to get out of the combined debt. VZ has $54B in debt of which $8.5B matures in a year. Ma Bell has $69B of long-term debt, which it spreads throughout its empire of subsidiaries.

Luckily, CLEC's can still take advantage of the copper plant to deliver business services, but they better have a plan in place for network 20K feet from the CO, because that will likely have to be installed by CLEC's themselves soon.

And if everyone is going wireless, is MVNO a profitable model? By bet is NO.

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