Survey predicts mobile operators face major change

The mobile phone industry is under increasing pressure to change. A survey by industry analysts Informa finds that high subscriber acquisition costs, mostly through the practice of subsidising or providing free handsets in contracts, are becoming increasingly unsustainable.

Based on over 1,000 industry survey responses, Informa found that 60 per cent of operators expect subsidies to decrease or remain the same in 2006. At the same time a huge majority of 84 per cent think that the price of voice services may drop by up to a quarter next year. Are the customers grateful? Not a bit of it. Almost half of those surveyed (49 per cent) expect churn to increase over the next twelve months.

Of course, mobile operators have been predicting the demise of handset subsidies for years and have yet to wean the customers away from cheap hardware. This time though, the threat of cheap VoIP calls may force the operators to change their strategy – the report predicts that mobile IP telephony may start to eat into their revenues in a big way next year. Even so, only 30 per cent of the operators surveyed saw VoIP as a threat next year.

IP telephony will be having an effect elsewhere in the telecoms landscape. Telcos – particularly those in the fixed line business across the world – will be looking to cut costs as they see revenues from the traditional cash cows of domestic callers evaporate. For BT, this will be exacerbated by local loop unbundling.

The principle engine that is driving cost cutting will be IP-based telephony. France Telecom, Telecom Italia, BT and NTT will be deploying IP-based networks to cut operating costs. The major operators also plan to roll out converged fixed-mobile-TV-broadband services that will allow the end-user to make ‘mobile’ calls at home or in the office at standard call rates. The survey found that 56 per cent of all respondents expect that integrated fixed and mobile operators will gain the biggest benefits from convergence-IP-broadband.

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