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How will the mobile networks survive?

IT HAS been 44 years since the first mobile phone call was made on April 3, 1973, when an engineer at Motorola called a rival telecommunications company, telling them he was speaking via a mobile phone.
Mobile phones have changed a lot since then – and so has the way we use them.

A report by Deloitte in 2016 found that 31% of smartphone users make no traditional voice calls in a given week. This contrasts with just 4% in 2012, and reflects the growth of consumer apps such as Facetime and Whatsapp.

Similarly, in the business sector, the growth of VoIP and phone system apps which allow people to get calls to their office landline number rerouted to their mobile has seen traffic move away from the mobile networks.

The use of texts in Britain peaked in 2011 - since then it has fallen by almost half and has been over-taken by instant messaging applications.

WhatsApp passed a billion active users in 2016 and research published by The Mirror on March 24, 2016 found that the main reason 42% of Brits used a mobile phone was to access messaging apps. Apps such as Snapchat have appealed to younger age groups who see SMS as old and unfashionable.


For the mobile networks, the risk is lost revenue, as SMS was always a key part of their income stream. So, with SMS declining, the loss of roaming charges in the EU and the potential that post-Brexit, other regions may also drop roaming charges – the mobile networks could see their profits dropping and their future looking a little less rosy than it has been.

It is possible that a growth in data usage, as a result of the Internet of Things and increasing use of data-based apps, will revitalise their revenues. However, whilst some people have high data usage due to video and music streaming, the average usage per device is still quite low. Research by Cisco showed that average monthly smartphone data traffic in the UK during 2015 was 1.2 GB - an increase from the average of 849MB per month in 2014. Even if that rate of growth was replicated again in the last 12 months, it still makes the average less than 2GB.

Although there are over 50 million 4G connections in the UK, the lack of coverage (the UK ranks 54th in the world) means that the applications and technologies that would drive data usage struggle to work effectively. This is where 5G, when we finally get it, may help the mobile networks as it’s likely to prompt a surge in data usage. However, the growth of wifi hotspots, present the networks with a new challenge.

Ultimately, the mobile operators need to make a profit to fund investment - especially in the next generation of 5G networks. The UK’s mobile and data telecoms plans are already five years behind countries such as Japan and South Korea. But, if users continue to communicate via apps (both messaging and voice) and use Wi-Fi wherever it is available then that can only lead to standard package prices going up to generate the revenues the operators need. Either that or the Government is going to have to fund more of the infrastructure – something that is already happening in many countries.

Dave Millett has over 35 years’ experience in the Telecoms Industry. He has worked in European Director roles for several global companies. He now runs Equinox, a leading independent brokerage and consultancy firm. He works with many companies, charities and other organisations and has helped them achieve savings of up to 80%.


Twitter: @equinoxcomms

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