Competitive Edge

 
 
By eweek  |  Posted 2001-05-07 Email Print this article Print
 
 
 
 
 
 
 

While hope for telecom competition dwindles with each failing local or data upstart, the wireless segment has maintained a decent track record, given the number of operators in each market.

While hope for telecom competition dwindles with each failing local or data upstart, the wireless segment has maintained a decent track record, given the number of operators in each market.

Most DSL companies are on the skids. There are few full-strength competitive local providers, and shrinking revenue streams have long-distance companies looking for profit elsewhere. By contrast, wireless is the poster child for competition. In some markets, five or more providers vie for customers. But, so far, competition has produced only some of the desired side effects.

Consolidation in the wireless market over the past few years has increased the number of nationwide operators but decreased the total operator count, as incumbents snap up the independents. The incumbents tainted those start-ups with their cautious monopoly mindsets, muting the scrappy innovation typical of bootstrap operations.

As a result, its hard to tell the difference between AT&T Wireless, Cingular Wireless and Verizon Wireless. They all have similar pricing plans; they all spend big bucks on advertising, and on sponsoring ballparks or music venues. Until Cingular began targeting the under-25 set and Hispanics, none had done a particularly good job of reaching beyond the mass market.

The Federal Communications Commission entrepreneurs auctions utterly failed, enabling only a couple of new start-ups — usually with close ties to the incumbents — to enter the ring.

Competition succeeded in lowering prices: Per-minute average airtime decreased from 41 cents in 1993 to 9 cents in 2001, according to research by The Shosteck Group. At the same time, the cost of spectrum licenses is artificially pushing prices up somewhat.

Still, it could be worse. Wireless carriers could be going out of business as quickly as their local-competitor counterparts. Instead, those few operators with differentiated services continue carving their niches and hopefully will provide impetus for the run-of-the-mill operators to get creative.

 
 
 
 
 
 
 
 
 
 
 

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