A few weeks after writing the article on my vision for the future of the mobile carrier industry – let’s call it the “pipification” (as in turning into pipes) of mobile, especially with the advent of 4G in the form of LTE and WiMax, and the subsequent conversion of everything into data, including voice, data, SMS – I came across the October 29, 2010, issue of Forbes magazine. Cover story? “The $10 Phone Bill” by senior reporter Steve Woolley. It is a fascinating piece on the Rise and Fall of the Phone-an Empire (with apologies to Edward Gibbon), in which Linquist and I largely see eye-to-eye. Of course, Linquist is a highly successful founder and CEO of a multi-billion dollar company, in which he has taken his vision forward. Nonetheless, it is interesting to see how much we agree.
The meat and potatoes of the mobile carrier industry – charging for calls and, secondarily, for text messages – is about to start a precipitous decline. Last year US growth in mobile minutes talked was 3% to 2.2 trillion minutes, the slowest growth ever. It is widely expected that 2010 will be the first year of decline. This, combined with competition and political pressure to keep per-minute and plan prices low and reasonable (with “reasonable” defined in odd and political ways), is the main reason that so many carriers are pushing subsidized expensive phones, including smartphones, with multi-year commitments. The money they make on data, and especially the margins, can often exceed what they make on basic voice. But this is just delaying the inevitable. MetroPCS and similar companies, including new players like the one for which I advocate in my earlier article, will eventually commoditize mobile service, with each company selling access to digital pipes, and competing on bandwidth, latency, availability (bits per cubic meter, as Linquist discusses in the Forbes article), and of course, customer service… an area where mobile carriers are not generally highly regarded (understatement here).
For the executives at AT&T Wireless, Verizon, Vodafone, Orange and the rest, this is pretty bleak; for those of us who use the service – i.e. everyone – and the entrepreneurs and executives smart enough to drive the trend rather than be driven by it, like Roger Linquist, this is a very rosy future indeed.