In Business Model, Internet Access, Mobile

No revenue source in the telecom industry has ever powered revenues forever. For more than a hundred years, fixed network voice was the only service, and revenues seemingly grew every year, as more people and businesses connected.

That fixed network growth trend ended in some countries by 2000, globally by 2003 to 2006 or so, even as account growth continues in Asia and Africa.

After that period, accounts began to fall, in many markets, even if growing globally in Asia and Africa.

But that maturation was replaced by a new growth cycle built on mobility. And when mobility account growth slowed, sales of text messaging services emerged as the next revenue driver. Then mobile internet supplanted messaging revenue growth.

But even internet access, among the newest telecom services, has a product life cycle.

In the U.S. market, for example, even fixed network internet access seems to have peaked, and subscriptions are now declining.

That does not mean use of the internet has decreased, but that people are finding other ways to maintain their connections. Mobile internet access, whatever present failings keep it from being a full product substitute for fixed access, seems to be the reason for the reversal in growth.

And though mobility has been the global revenue driver for a couple of decades, even mobility is moving to the peak of its product life cycle.

A drop in global mobile revenues forecast for 2018 will be the first time in the history of the mobile industry that service revenue contracts year on year, according to Ovum.

That is why many tier-one service providers now are looking to content services for growth. The triple play was the first iteration, when service providers added video subscriptions to their voice and internet access offerings.

Now many are looking to online services and a move up the stack into ownership of content assets.

“Future success remains in the hand of their television content strategy,” some would say of AT&T’s move to buy Time Warner. That move, in turn, mirrors the earlier move by Comcast into ownership of content assets, especially NBCUniversal.

Further such moves are almost inevitable, as the 5G era, with its focus on internet of things, emerges. As access revenues were not enough to sustain growth in the video content area, so IoT connectivity will not be enough to drive revenue growth in the IoT era.

Ownership of at least some key applications or platforms likely will be essential, just as ownership of content assets has made sense in the present era.

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