Mobile Will Weather the Storm

Implications: Wireless services have become such an integral part of our everyday lives that the current financial turmoil will not significantly impact the mobile market.

Analysis: In economic down times it is natural that consumers and businesses review spending and tighten their belts where possible.  This often includes telecom and entertainment spending, the two categories where the mobile budget resides.  Mobile phone usage, however, has penetrated every life and is not easily curtailed, even in slower economic times.  From the teenager who sends and receives 1,000+ text messages a month to the 20-something that does not own a landline to the road warrior that leaves the office with only his or her smartphone to the parent who is always accessible, we have become reliant upon mobile phone service.  Mobile is not only for communications, it often provides “cheap” entertainment (e.g., games, mobile web browsing).

The mobile industry is not completely immune from the economy.  Areas that might be impacted include high-end device purchases and upgrades, application and entertainment downloads, and premium services like GPS and mobile TV.  What will be in high demand during economic uncertainty are bucket planes for minutes, messages and mobile data so that consumers and businesses can have budget certainty.   

Pure-play and pre-paid mobile operators offering attractive bucket plans, including T-Mobile (USA), TracFone, Metro PCS and Leap Wireless should weather the storm.  The two largest US mobile operators, AT&T and Verizon, may see a shift in their customers’ phone usage (possibly within their own product offering) from traditional landlines to mobile phones and VOIP phone service, especially if they offer attractive bundles with price caps.

Several years ago mobile communications moved from a luxury to a necessity and became a fixture in personal and business lifestyles and budgets.  With this momentum in place, the current economic situation will not have a meaningful and sustained impact on the mobile juggernaut.