What can be learned from the us mobile operator industry?


Mobile operators in the United States are going through an upheaval as they see previously key sources of revenue decline. The earlier ecosystem of operators providing voice, messaging, and data sources is transforming into one that serves as the connection for everyone and everything.

Despite the growing importance of providing connectivity, the largest operators, Verizon Wireless and AT&T Mobility, are seeing service revenues increasingly decline. Over the last five years, both Verizon and AT&T have seen mobile service revenues grow more slowly than incomes in the United States, with absolute declines over the past few years.

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Without changing the business model, this trend will continue as these operators become only platforms for over-the-top services.

So what can the US operators do in response? One notable trend is the acquisition of media companies. AT&T’s purchase of Time Warner and Verizon’s acquisitions of AOL and Yahoo! show the development of mobile operators attempting to integrate with adjacent services.

We see this trend as a positive step for operators as it will allow them to begin to capture the opportunity in mobile outside of voice, messaging, and data. However, mobile operators must continue to look for new sources of revenue. Using a similar model to the approach of AT&T and Verizon with media businesses, mobile operators can find success in avoiding the service revenue declines that will otherwise likely continue.

The increase in integration of mobile operators with associated services in developed markets is also relevant for mobile operators in emerging markets. While emerging market operators are already finding success in mobile money, these companies must also start examining where consumers will look next to use their mobile devices.

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Sources: Company reports, Canback Global Income Distribution Database (C-GIDD)