Some trends are so clear, so enduring, that one almost hesitates to point them out. For example, in its 2017 telecom industry forecast, the Economist concludes that telecom companies “will seek new sources of revenue as traditional streams dwindle and pressure from growing mobile broadband usage mounts in 2017,” say researchers at the Economist Intelligence Unit.
“Declining revenue from traditional channels like voice calls and text messaging is eroding utilities’ balance sheets,” the forecast points out. That is one good reason why service provider executives now pay so much attention to virtualization, lower-cost access network platforms, resource sharing and operational efficiencies, plus a high-priority search for big new revenue sources.
The biggest stresses are in the fixed network part of the business, as revenue has been declining since about 2011. In fact, according to the Economist, we will by about 2017 reach a point where revenues are lower than on-going investment.
In other words, on a cash basis, the global fixed networks business will go negative, overall. Annual revenues will be less than investment to operate the business. The mobile segment is not in that predicament, yet. And mobile has some advantages, namely an investment profile that is lower than fixed networks require, plus upside from big new businesses including entertainment video and Internet of Things apps and services.
That necessarily will start--or accelerate--a process of rethinking the role, scale and scope of fixed networks. Over the long term, fixed networks cannot be operated at a permanent loss, much less justify continual investment in higher speeds and capabilities, as revenue drops.
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