One fundamental element of competition in most communication markets these days is that contestants have to have a strategy for competing not only against the expected contestants, but also disruptive new contestants formerly “outside” the industry.
For fixed and now mobile service providers, VoIP was a challenge launched by firms outside the traditional business, and forced every service provider to figure out whether to fight, cooperate or ignore the threat.
“Ignoring” threats from competitors that essentially destroy both markets and profit margins might seem a pointless strategy, but is a rational “harvesting” strategy often used by firms facing long term decline.
With the advent of new competition from additional Internet service providers, mobile service providers are going to have to make big choices. Most observers expect that mobile networks will continue to drive Internet access in many developing markets.
Mobile Internet access, for example, grew between 40 percent and more than 80 percent in Asia, Africa and other regions between 2010 and 2013. Most expect high rates of growth to continue.
But the unmet need is what is spurring huge new investments in satellite-based Internet access in those same markets.
So mobile service providers have to decide whether to spend much more on new network footprint to reach new areas, or allow the satellite providers to grab the market. Much depends on how mobile service providers answer.
But the new low earth orbit satellite networks also emphasize a key element of the business model, namely that affordability and network cost are big issues, says Mark Bass, Bell Laboratories Advisory Services partner.
The new satellite contestants believe they will be able to deliver Internet access more affordably than existing satellite networks, and more affordably than mobile networks or fixed networks.
In that sense, the strategic choices mobile operators have to make are similar to earlier decisions made by telcos facing VoIP competition.