Smartphones toppling traditional telco revenues

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The growing popularity of the smartphone is having a major impact on traditional telecoms markets and revenues thanks to generous bundles, over the top (OTT) applications and some consumers eschewing the landline altogether.

In parts of the developing world, mobile phones are affordable and more readily available than fixed line networks. This inevitably means the former is far more popular than the latter, but there are signs this is happening in more developed nations too.

According to the latest figures from ReportLinker, in Australia the number of mobile phone users without a landline will increase by almost ten per cent to 7 million in 2018, before reaching more than 8 million in 2020.

Challenger

In the US, many cities only have access to a single broadband or cable provider, meaning there is no competition and prices are high. ‘Cutting the cable’ is an increasing popular trend where consumers bypass cable TV in favour of streaming services, but there are signs that even broadband networks are being dropped.

ReportLinker suggests that smartphone use in the US is becoming a major challenger to Wi-Fi, with 40 per cent using their device to access the Internet at home. Nearly one half check it from their bed, while three quarters don’t turn their phone off during a day, highlighting how the technology has become engrained in American culture.

“The smartphone has become the dominant device in private lives of the 21st century,” said ReportLinker. “It may be a speculative reach to announce that fixed telephone lines and wi-fi are going to vanish from the private household of the average person. Nevertheless, humanity’s love for “going mobile” is reflected in modern communications technology trends.”

In the UK, where a landline connection is essential to access broadband services on the BT Openreach network, the popularity of mobile broadband is having its own impact on telecom revenues.

Intense competition in the market means that the average monthly amount spent on mobile services is falling. According to ReportLinker, in 2016 the figure was £43.55 while the 2018 figure will be £41.12. This is set to fall again to £38.89 in 2020.

British mobile users are increasingly turning to WhatsApp and other chat applications instead of texts. In 2016, 89 billion SMS messages were sent but this is set to fall to 64 billion in 2018. In 2020, the figure is expected to be 40 billion.

However mobile data consumption and voice calls are rising. In 2016, 146 billion minutes worth of calls were made, a figure set to rise to 152 billion this year and 158 billion in 2020. This will inevitably have an impact on landline revenues.

UK mobile operators have sought to increase their revenues by attracting more subscribers with generous bundles and bigger data allowances. Indeed, out of bundle revenues have fallen from £2.1 billion in 2016 to £1.4 billion in 2016. By 2020, this will be just £600 million.