Telecom Trends to Watch For in 2015

The stage is set for 2015 to be a chaotic year of rapidly shifting landscapes for the telecommunication industry. While nobody can predict with absolute certainty what the future will bring, here is a rundown of some of the more likely scenarios:

Big Mergers

Telecom in 2015What do Comcast, Xfinity, TWC, Charter, Greatlands, AT&T, U-Verse, DirecTV, Cricket, T-Mobile, MetroPCS, Verizon, Vodafone, Iusacell, Sprint and SoftBank have in common? All of these brands have recently been—or will be—involved in major merger/acquisitions this year. Currently, all signs are pointing toward the approval of two mega-mergers that are awaiting regulatory approval. Comcast will purchase Time Warner Cable and AT&T will purchase DirecTV. These mergers will likely lead to an increased focus on creative bundling of services.

Merger madness means that well-known brand names will struggle to maintain their equity, as customers struggle to figure out who owns whom and what each brand represents. This not good news for telecom, for as I have pointed out in previous posts, confusion and customer dissatisfaction are the likely result of mergers (read Merger Mania), compounding the problems in an industry already struggling with consumer trust (read To Trust or Not to Trust).

Price Wars

The price wars of 2014 look like they will only get fiercer in 2015. In the first week of 2015, AT&T launched its “Rollover Data” whereby unused data can rollover to the following month. This follows T-Mobile’s introduction of its “Data Stash” feature only three weeks earlier. It appears that every pricing move is quickly met with a competing response within a matter of days or weeks. These constant pricing changes lead customers to be more likely to churn due to competitive lure. I expect this ultra-aggressive pricing will not only continue in wireless but will also spread to TV and high-speed internet.

The good news is that customers are getting some of the best telecommunications deals in history. The bad news is that all of this is really starting to impact the telecom carriers’ bottom lines.

Over-The-Top Television

The end of 2014 introduced customers to new ways to get their favorite television channels without subscribing to traditional cable or satellite service. Many customers have cut the cord, in favor of Netflix, Hulu, Roku, Apple TV and YouTube. In 2015, these cord-cutters will have even more choices, with streaming no-contract options from HBO, Showtime, Sony, CBS and even Dish, which just announced a new $20 service for streaming ESPN, TNT, TBS, the Food Network, HGTV, the Travel Channel, CNN and ABC Family.

As these new over-the-top offerings become more mainstream, cable and satellite providers will need to convince their customers why old-fashioned pay TV still makes sense. Undoubtedly, competition will heat up as a result. Content providers and cable/satellite operators will need to rethink their business models, just as has been happening in the wireless arena for the past 18 months.

Internet of Things (IoT)

If CES 2015 is any indication, the IoT might finally hit its stride this year. The biggest news is that the connected car is finally here, and the connected home is right around the corner. While both of these have been trying to break through to the average consumer, 2015 is likely the year where it all comes together and the consumer starts to understand how this can be a reality.  For an interesting point of view on the security realities of the IoT, read Paul Hartley’s recent post, Rise of the Machines.

Obviously, connected cars and connected homes are dependent on robust and reliable connections.  These connections (both LTE and WiFi) are bound to be the life-blood for telecommunications carriers in 2015 and beyond. The big question will be whether these carriers can successfully make the shift to content providers, or if they will be relegated to dumb pipes that simply provide behind-the-scenes connectivity for other companies’ cool connected concoctions.

Market Research Implications

Telecommunications providers are facing the reality that their world is changing rapidly. These changes can lead to great opportunities or to a slow march to extinction. Providers would be well advised to accept these changes and rethink their competitive landscapes.

Now is the time to embrace and expand your market research plan. Understanding these new realities is critical to successfully navigating this new world and determining where the provocative opportunities lie. Brands that embrace the new world will be tomorrow’s heroes; and those that do not are destined to become irrelevant.

Let Market Strategies help ready your organization for the new world of telecom. Email me or comment on this post, and let’s get prepared for 2015 and beyond.

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This entry was posted in Industry Expertise, Technology, Telecommunications and tagged , , , , , by Greg Mishkin. Bookmark the permalink.
Greg Mishkin

About Greg Mishkin

Greg is a vice president in the Telecommunications Research Division but works across all divisions and is in high demand as a speaker and author in the market research and telecom fields. Greg's responsibilities include managing and growing key client relationships while maintaining a special focus on the integration of large-scale behavioral data with Market Strategies’ traditional market research solutions. He is known for turning extremely complex data into actionable insights and turning data into competitive advantages for his clients. Currently, he has four patents related to data-focused market research methodologies. Greg earned a master’s degree in business administration from Kennesaw State University in Kennesaw, GA; a master’s degree in clinical psychology from University of Hartford in Hartford, CT and a bachelor’s degree in psychology from Union College in Schenectady, NY. When not on the road for work, Greg can usually be found chasing after his 17-year-old twins to their respective musical theatre performances, symphony rehearsals, piano competitions or various other performing arts activities that are invariably too far from home.

4 thoughts on “Telecom Trends to Watch For in 2015

  1. Hi Greg – Very simple and straightforward article which summarizes the most important trends. But, these trends appear very specific to the US market. (if the context is US market, then fine) Elsewhere, the scenario is slightly different- For e.g., in Europe, some of the leading operators did touch on the topic of pricing during analyst calls. This is one area where they don’t want to get into.

    Mergers- yes, this will continue for some more time. BT’s acquisition of Everything Everywhere is the biggest deal to start off. And, we have more to come, hopefully 🙂

    IoT – Might be more apt if this is aligned to the Industrial segment rather than the consumer segment for obvious reasons.

    Surprisingly, 2G is more famous in several markets across Asia (where data usage is still in infancy stage compared to other mature telco markets). and, it continues to be so for some more time!!!

  2. Thanks for the comment, Venu. You are correct that I was writing this article primarily from a US perspective. As I re-read it, I see that I did not make this point clear enough. Thank you for pointing this out for me.

    Your point about the EU carriers not wanting to get into a price war is interesting, as this is the same way that the US carriers felt. However, this all changed once T-Mobile brought on new leadership and became very aggressive in both their pricing and marketing. I think the universal lesson here is that just because the carriers might not want to employ certain tactics, it will only take one rogue competitor to quickly change the reality.

    • Hi Greg – Thanks for your comments.

      I may not completely accept with reference to the price wars. Again, it might be limited to a specific geo. In US, it may be true with T-Mobile – but I am not sure about it. If we consider the latest spectrum auctions (AWS-3) and the kind of money that all the US operators have put in, I am not sure if they get into price wars for getting a couple of percentage points to become a market leader.

      On a different note, how will a market leadership position help if your balance sheet is looking dreadful? Case in point is Reliance Communications in India who started price wars in Indian telco way back in 2003 (CDMA technology). The current state of affairs is most depressing.

      This might be one of the reasons many European operators stressed this concept of price wars during investor calls. “If a competitor offers at a price lower than what we think is not feasible, they take the business”. This is coming out from multiple operators.

      • Hi Venu:

        You are correct that it seems illogical that carriers would want to fight over low-margin market share — and this is an oddity that many of us in the US Telecom industry often scratch our heads about. The reality, however, is that they do fight like mad for this coveted market share, often to the detriment of their bottom line.

        In fairness, the US probably has the strongest (or at least purest) capitalistic model anywhere, so perhaps some of the ultimate decisions by the European carriers might be different. Yet, I can assure you that 7 years ago the leadership of the major US carriers clearly were not interested in participating in price wars any more than the European telecoms are today. However, when T-Mobile became infused with cash (as a result of the breakup fees associated with the failed AT&T acquisition) and brought on the aggressive leadership of John Legere, the major carriers like AT&T and Verizon had little choice but to play by T-Mobile’s new rules — and the industry has irreparably changed as a result.

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