2013 is going to be another tough year for the telecoms industry with a continued emphasis on cost control. For operators, the migration to a data-centric business and revenue model will continue apace. And we see risks for those operators that do not invest properly in building wide-area networks that can deliver high-quality data services.
When it comes to new services, there will be a continued usage migration to smartphones
. But both established and new players are trying to figure out how best to monetize mobile usage. Don’t be surprised to see some of the disruptors being disrupted by new technologies and business models in 2013.
1. Wi-Fi will become a victim of its own success
There will be a shift in operator sentiment away from public Wi-Fi as it becomes evident that the growing availability of free-to-end-user Wi-Fi devalues the mobile-broadband business model. Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public Wi-Fi investments to continue to propel the deployment and monetization of Wi-Fi.
2. Facebook goes all in on mobile
is having a tough time translating its popularity on mobile devices into revenues. Although it’s most recent financial results at last showed some improvement in mobile advertising revenues, we do not believe that this alone will be enough to sustain and grow its mobile business.
There are three new monetization strategies currently available to Facebook: 1) develop new premium services to sell to its existing customers; 2) take a share of revenues from third-party content providers that develop services on its platform; or 3) expand into the device or device software business.
We believe that the first two are Facebook’s preferred options and that billing and marketing / distribution relationships with operators, particularly in emerging markets, could bring tangible benefits. With regards to the devices business, we expect Facebook to emerge as a strong backer of the new Mozilla mobile operating system which is expected to challenge Android in the low-cost smartphone device sector.