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The ‘perfect storm’ of mobile disruption is brewing

By Claus Hetting   /     Mar 22, 2015  /     Uncategorized  /  

I’ve been talking to a lot of investors lately. Generally, people outside of the telecoms industry get the disruption story very quickly: Wi-Fi is on the brink of upending the mobile industry. Simple economics will always win. You can’t beat the Wi-Fi price/performance ratio.

So I’ve already written a lot about all the new ‘Wi-Fi First’ and Cablevision’s ‘Wi-Fi Only’ plays not to forget Google’s rumoured MVNO service. Here’s what I just came across from Chetan Sharma – he writes excellent reports on the state of the US mobile market. You can find the latest update here.

The results are startling. “Revenue from new customers [among the US MNOs] is approaching zero”. “Mobile data pricing dropped by 77% in 2014” (I’m guessing this is mostly results of Mr John Legere’s big un-carrier push). “Post-paid ARPU is in a free fall” – it has dropped from 3% (Verizon) to 12% (AT&T) in 8 quarters.

Add to this the 45 billion dollar spend on AWS-3 licenses plus another 40-50 billion that MNOs will need to spend on networks to support these bands. Add to this some 200 billion dollars of debt. All of this money spent on technology – excuse me – that is simply too expensive and too slow. Mobile is becoming legacy.

Here’s something else that struck me: Look at the picture below. Apparently, it takes the mobile industry 7-8 years to create a new standard (like 4G and presumably 5G although this is not a standard and I remind you that it does not exist yet). It also takes more than 10 years for that technology to ‘peak’ with a total lifetime of 20 years.

Image above: Courtesy Chetan Sharma Consulting.

As a Wi-Fi person, these numbers are astounding. I wish I had a similar graph for Wi-Fi (I may produce one at some point) – but here’s the best representation I could find, courtesy IEEE. My educated guess is that new Wi-Fi standards (such as 802.11ac first wave) reach the market and peak inside of 2-3 years at the most.

The tech industry can’t afford to ‘wait for 5G’. And it won’t.

We’re going to be showcasing innovation & progress in the Wi-Fi industry at the WIS2015 in San Francisco on April 21-22. And we going to be debating the big issues with the industry leaders. Don’t miss this opportunity to get involved in Wi-Fi now. Go to this link to check out our program & register!

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