No business strategy lasts forever. Five decades ago, profits were driven by long distance calling and the base business was selling monopoly voice to everyone. Sometime in the 1980s the revenue and profit growth shifted from fixed network long distance to mobility. Fixed network operators facing stiff competition switched to a multi-product consumer services strategy.
By the 2000s subscription growth drove mobile revenues. By the 2010s internet access began to be the revenue driver for fixed and mobile operators, not voice or subscriptions.
When organic growth is quite slow, one obvious solution is to expand geographically, buying market share out of region, in other words. Many European firms, for example, went on a huge global expansion spree in the 3G and 4G eras. A shift to mobile internet access is helping mobile operators deal with revenue as subscriber demand reaches its limit (everybody who wants to use a mobile phone already has one).
But decades-old geographic expansion plans conducted by some mobile operators now are unwinding, as the contribution to revenue growth has not often been matched by increases in profits. So the new question might be, if geographic expansion is not generally feasible, how can mobile operators in regions with saturated demand (subscribers and internet access) reignite growth?
Fixed operators face similar challenges. In some markets, severe competition has forced telcos and cable to shift from single product strategies (video only or voice only) to multi-product strategies (voice, video, internet). Cable operators clearly dominate market share in the U.S. fixed network internet access business. The issue is whether the business model works without other customer segments and products. If the answer is no, then the multi-product strategy will still have to be pursued.
We might be reaching the end of that strategy, in consumer market. When big and small cable operators alike start to say their future is internet access, not video or voice, one must ask whether such a single product strategy will work, long term.
So mobile operators face a huge question: what comes next if subscriber growth and mobile internet growth are near saturation, and geographic expansion no longer is possible? For fixed operators, the issue is that the triple play strategy of bundling and selling multiple products seems to be unraveling as well. The big shift might be from multi-product consumer bundles to multi-product operations based on consumer fixed network internet access, consumer mobility and business capacity services.
In both mobile and fixed domains, the issue is: “what comes next?”