Impact of Mergers and Acquisitions
As the wireless industry continues to face immense cost pressures, it is important to understand the impacts that will be shared by all who are a part of the infrastructure of this business. Wireless companies who were once faced with the challenge of growing at any expense, are now faced with an entirely different challenge - maintaining their existing network in the most cost efficient manner possible. Over the past year we have seen every major cell phone company roll out new, affordable calling plans featuring unlimited minutes, as well as other features like 'rollover minutes' 'mobile to mobile calling' 'friends and family' plans, etc.
While all these features reduce the cost a consumer pays monthly for their cell phone bill, it also reduces the profit marginsof the cell phone company. We are already seeing the beginnings of a price war between the major cell phone companies, It started when Boost Mobile (who operates on the Nextel network) offer unlimited calls and texts for $50 a month on a prepaid basis. Then Nextel, Verizon, AT&T, and T-Mobile all rolled out unlimited calling plans for around $99 a month. T-Mobile then offered calling plans to existing long term customers for $50 a month. MetroPCS and Cricket also rolled out unlimited calling for as low as $30 a month. Sprint went a different direction by offering their "Simply Everything Plan" which offers unlimited calls, text, Internet, etc for $99 a month.
The wireless companies are banking on making money on the data portion of the network, however as time passes, expect to see prices come down here as well.
To combat these changes, Several things are happening"
- The wireless companies have retained two companies to contact wireless lease holders to negotiate lower rents.
- Mergers and acquisitions have been happening and are reducing the need for redundant towers and antennas nationwide.
- Network sharing is becoming a larger factor in Europe. As success is realized in other locations, we can expect to see this occur in the U.S. as well.
Also, new technology is moving to shape the face of wireless communication as well.
- Satellite service appears to becoming closer to being a reality as well.
- Skyterra is in the process of developing a hybrid Satellite-Cellular network
- Qualcomm has already delivered phones to the market that combine the ability to use regular cellular service and satellite service.
- Mobile Satellite Ventures (now Skyterra)ordered several Satellites from Boeing scheduled to be launched in 2010 to compete with standard Cellular service.
- VOIP (Voice Over Internet Protocol) is also becoming more viable. This will allow WiFi enabled cell phones to use applications such as Skype to make phone calls without using plan minutes! AT&T just announced that they have enabled the iPhone to do just this!