U.S. Mobile Business is Becoming Unstable

By Gary Kim August 08, 2012

There are growing signs that the U.S. mobile service provider market is unstable, and on the cusp of changes that could include a significant wave of provider restructuring, despite the failure of the AT&T bid to buy T-Mobile USA. 

"What is clear for now, in our view, is that the current strategy, indeed the entire current business, isn't working," said Craig Moffett, an analyst at Sanford C. Bernstein. Moffett seems to be referring to the whole business operated by regional U.S. wireless carriers. 

To be sure, Moffett has been saying that the U.S. mobile business is saturated since at least 2009. 

Regional or prepaid service providers clearly have had a tougher 2012 compared to the mid-2000s, for example. Leap hasn't been profitable since 2005, for example. MetroPCS profits dropped 63 percent during the first quarter of 2012.

A study undertaken by Tellabs suggests that mobile service provider profitability could become extremely challenging for some mobile operators within three years, with costs surpass revenue for many operators.

In North America that could happen by the fourth quarter of 2013 or as early as Q1 2013. Developed Asia Pacific service providers could see problems by the third quarter of 2014. In some cases this could happen as early as Q3 2013, Tellabs said. 

Service providers in Western Europe could run into trouble by the first quarter of 2015. In some cases this could happen as early as the first quarter of 2014.




Edited by Brooke Neuman

Contributing Editor

SHARE THIS ARTICLE
Related Articles

SpaceX and Blue Origin Talk Seriously Going to Mars

By: Doug Mohney    9/29/2016

SpaceX CEO and nerd-god Elon Musk put forth his architecture for mankind to colonize Mars and potentially other bodies in our solar system on Tuesday,…

Read More

The Galaxy Note 7 Disaster: Samsung's Strategic Weakness

By: Rob Enderle    9/29/2016

Samsung was really the only company in recent years to truly threaten Apple successfully; granted, they did so largely with Google's help. But Apple h…

Read More

Was the Yahoo Hack State-Sponsored? Unlikely Says Cyber Expert

By: Gerald Baldino    9/28/2016

Last week, Yahoo confirmed at least 500 million user accounts were compromised by a data breach in 2014. The attack was the largest security breach ev…

Read More

Will Disney Make Twitter the Happiest Social Media on Earth?

By: Alicia Young    9/26/2016

To get back on their feet, Twitter is reportedly seeking an acquisition deal that would value them at $30 billion. There are a few contenders already,…

Read More

500M Yahoo! Users Impacted by Hack; What It Says About Password Protection

By: Paula Bernier    9/23/2016

Yahoo! is facing a lot of challenges lately. Add to the heap the breach - which the company confirmed today - that has affected 500 million Yahoo! acc…

Read More