2006 What's Next for the Wireless Industry?
By Michael Fickes
Wireless executives know their industry and have a good idea of where it is going. At least, they know where they would like the industry to go. But are those destinations available? Are there better destinations? What issues might interfere with a wireless company’s best-laid plans for the future? Sometimes the views of an objective outside observer can help sort through shifting possibilities and light up a different path. On the theory that hearing and considering diverse opinions can help executives formulate better business strategies, Wireless Wave recently spoke to four industry analysts and asked for their views on industry consolidation, finance, 3G, regulations, you name it.
Our panel includes Gerald M. Belson, a principal and national practice director in the Deloitte Consulting, LLP telecommunications industry practice group; Carol Mattey, a regulatory expert and director in Deloitte’s technology, media, and telecommunications consulting group; Gregg Sutherland, a partner with the Ernst & Young, LLP, business planning and analytics practice; and Scott Cleland, CEO of Precursor, an investment research firm specializing in technology and telecommunications.
All four have watched the wireless industry grow over the years, studying its fits and starts and ups and downs, and thinking about the future. Take a minute to read what they have to say.
Two Growth Trends: Consolidation and MVNOs
Ernst & Young’s Gregg Sutherland identifies two major growth trends shaping the wireless industry today: consolidation and mobile virtual network operators (MVNOs).
Consolidation: The aftermath of three major mergers in the past 18 months suggests that consolidation is strengthening the industry. “The global markets where wireless players are achieving adequate returns and cash flows tend to be in countries with only three or four major players in the market,” Sutherland says.
“The U.S. has always had many major players competing in that space, and neither margins nor returns have been satisfactory to most.”
As the U.S. industry consolidates, the combined companies are larger and more sustainable, continues Sutherland. They have an easier time attracting shareholders. And they find it easier to raise cash for necessary investments and generate adequate returns on those investments.
