Endgame looms for US wireless industry

The halcyon days for the US wireless industry are coming to an end and the sector must brace itself for tough times ahead, warn industry analysts.

With the strong growth of two years ago a thing of the past, the industry is approaching maturity and 50 per cent market penetration.

It now faces a number of challenges, according to the latest research from Yankee Group.

Companies will need to find ways of dealing with high fixed costs, low profit margins and heavy competition as North Americans now treat wireless as a utility rather than a novelty.

"The US wireless industry is facing the threat of becoming like the airline industry: high fixed costs, low variable costs, a perishable product and cut throat competition," said Roger Entner, wireless/mobile services programme manager at the analyst.

According to Yankee Group, with the current state of wireless competition it is only a matter of time before operators are forced to offer unlimited nationwide calling plans.

The analyst said that it expected wireless number portability, commencing on 24 November in the US, to be a catalyst for this move.

"These conditions make it easy for industry participants to behave in a way that has potentially disastrous consequences in the long run," said Entner.

"Airline travel is cheaper than ever before, but few customers are happy with the experience."

Although the study does not expect wireless number portability to have a significant impact on a per-annum basis, it predicts that the quarterly impact will be large, even if it spreads across the fourth quarter of 2003 and the first quarter of 2004.

See also:

How to Sell: Wireless - Part 1 - Joining the wireless set

In the first of five examinations of the wireless market, Simon Meredith sees an industry finally coming of age.  12 Oct 2003

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