Over the past decade, the telecom industry has undergone a series of technological shifts, which have dictated trends in carriers’ capital expenditures. Alex Gellman, CEO of the tower development company Vertical Bridge, says the general trend has been the movement from a “wired to a wireless world.”
Since 2004, for example, wireless minutes have doubled while landline minutes were cut in half. The main causes of this shift were convenience and the cost benefit of cellular devices over landline devices.
“Back in 2009 when the recession hit, what was the first bill that most people were going to cut—the home phone bill,” Gellman told an audience during his address at the South Wireless Summit in Nashville, TN yesterday.
This particular shift is emblematic of the larger trend in telecom—from a wired to wireless world. Gellman said this same trend applies to the shift we are now seeing from cable providers to wireless providers delivering video content.
Gellman cited a stat that said 3.7 percent of paid cable subscribers are “extremely likely” to cut the cord within 12 months, which has doubled since 2011.
“TV is starting to look a lot like voice and line,” Gellman said.
Gellman said thanks to recent network innovations, wireless carriers are becoming better equipped to deliver content more quickly than cable providers.
“My son will sit and stream data on his phone at our house, and about the 20th of every month we have the same discussion,” Gellman said. “I say ‘why aren’t you using’ the WiFi, and he says ‘because it’s slow.’ That means that U-Verse is slower than Verizon when you sit at my house, and that’s the world we’re moving into.”
Gellman said this industry-wide shift to a more wireless world has dictated recent spending patterns of the industry’s largest carriers. During the build out of 3G technology—from roughly 2007 to 2008—carriers’ capital expenditures increased, similar to the build out of 4G technology from 2010 to 2013.
This explains the recent slowdown in capital expenditures from carriers, Gellman said. But due to this shift from cable to the digital delivery of video content, Gellman expects carrier expenditures to increase in order to accommodate the delivery of streaming video.
“Video consumption patterns are really starting to change,” Gellman said. “Cell phones are becoming the primary delivery for entertainment, especially for younger consumers.”
Gellman predicted that large tech companies like Amazon, Apple and Google—who specialize in delivering streamed content—will use more data to deliver this content in the coming years.
“So if the majority of eyeballs are on Smartphones, and the majority of videos are delivered on Smartphones, what do you think these large tech companies are going to do?” Gellman asked the audience rhetorically.
Because of this “next frontier”—the shift from wired to wireless delivery of video content—he expects carriers to increase expenditures.
Vertical Bridge owns and operates wireless communication infrastructure across the United States. For more information on the company, please visit its website: http://verticalbridge.com/