“2007 Global Mobile: Data and Content Markets” reports that Sprint’s current income is more than 80% dependent on voice services; however, over the next five to ten years the company’s voice income will decrease to less than 20% voice income, with the remainder coming from data.
The report says the company lost a legal battle to keep the phones locked up preventing its customers from using them on other networks.
Authors of the report predict that mobile operators in developed markets are experiencing a threat to their traditional mobile service. With a mobile phone market that is almost saturated, companies such as AT&T, Verizon, Vodafone and T-Mobile are poaching each others’ customers and Average Revenue Per User (ARPUs) are dropping on that competition battleground. Sprint is, of course, doing the same but so far they are in a net loss position in this struggle.
WiMAX could play a role in this battle and in particular in the transition phase from mobile voice to mobile data, and could leapfrog its competitors, but Sprint has chosen to develop its WiMAX service separately from its mobile business, using it for Internet access.
The report shows that while there will be a niche market for such a ‘fixed wireless’ broadband service – one that will allow Sprint to compete with the fixed broadband services from Verizon, AT&T and the cable companies – the wireless broadband technology will never win from these competitors in the large metro and regional town markets. Authors of the report say the fixed technology will always remain the most efficient and effective access technology in the mass markets for services such as these.
The study shows that WiMAX as a standalone ‘fixed wireless’ technology will not be able to successfully compete with the fixed operators.
Instead it has far more potential to compete in the mobile market, since it offers superior mobile data service. It will eventually offer, in a far more efficient way, both voice (VoIP) and data combined and, when it is finally commercially developed, it will be the ideal technology for personal wireless broadband services.
While theoretically Sprint could operate under such a model, it is far more complex, potentially rather costly, and if poorly executed outright dangerous for its incumbent business. Authors of the report say they have never seen any indication that the company would be willing to develop such a complex model.
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