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Thursday, February 3, 2011

Are these the last three years of profit for mobile operators?

Mobile internet company Tellabs has published a survey that indicates profitability could become ‘extremely challenging’ for some mobile operators within three years.

It says costs will surpass revenues for many operators if they don’t rethink the design and capabilities of their networks. The survey, based on independent analyst data, sets the following critical dates:

Q4 2013 for North America. (In some cases this could happen as early as Q1 2013).
Q3 2014 for the developed Asia Pacific region. (In some cases this could happen as early as Q3 2013).
Q1 2015 for Western Europe. (In some cases this could happen as early as Q1 2014).

Rob Pullen, chief executive officer and president of Tellabs, said “Mobile operators can spend themselves into a hole well before users run out of hunger for capacity. Our study shows that simply adding capacity or 'dumb pipes' is an unsustainable business. To avoid the 'end of profit,' operators must bring intelligence to their networks – it's critical to carrier survival.”

The company says the dates vary because of the following regional differences:

North America – higher network access costs make North American operators most susceptible to the changes wrought by the mobile Internet. This is despite earlier adoption and roll-out of more cost-effective network technologies.

Developed Asia Pacific – rapid revenue decline is the primary challenge faced by operators in developed Asia Pacific markets. Analysys Mason predicts a revenue per gigabyte decline of 88.2% between 2010 and 2015.

Western Europe – lower network access costs and a more gradual revenue decline lessens the impact on Western European operators.

[Executive summary (pdf)]

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