Comments on article found at: blogs.barrons.com/techtraderdaily/2010/02/26/wireless-industry-growth-drops-below-3-and-still-sinking/

There are few things going on here at the moment that impact wireless industry revenue growth. First there is a deep recession that has left millions unemployed. Second the wireless industry is now 26 years old. In other words, wireless is a mature industry.

I am not saying there is no room for growth. The growth will have to come from creating high margin services and intelligently managing existing low margin services. Revenue growth can no longer come from simply adding subscribers. There only 300 Million people living in the United States. If you add up all of the subscribers the major wireless carriers provide service to, you are looking at nearly 280 Million subscribers being served. How much more growth can you expect.

Investors need to put this in perspective. Aside from this disastrous and long recession, the wireless carriers are now facing a market where nearly everyone between the ages of 10 through 100 owns a cell phone. Back in 1990, market growth was about subscriber growth only. The bulk of the country still did not own a cell phone and the bulk of the marketing was focused on selling cell phones to automobile owners for purely emergency use only. The only other real customer segment was business professionals and back then only executives. Selling back then was all about convincing customers they needed to be able to call someone from something other than a coin operated telephone or a landline telephone. Furthermore, back in the early and mid-1990s the B-side cellular carriers could not operate outside of their designated territory. Throughout most of the 1990s, carriers could charge a fortune for roaming. Once those barriers were lifted it was a new ballgame. Suddenly, the cellular carriers could pursue business throughout the country, without restriction. By the turn of the century, roaming charges could no longer be relied on as one of the key ways to make money. The only way to make money was by signing up first time cellular users.

It is now 2010. Is it a wonder that the industry has reached maturity?

So how do cellular carriers make money now? The carriers need to generate revenue by creating substantial value for their subscribers by packaging existing services in a way that attracts customer; this usually means large volumes of low cost minutes. The other way for carriers to generate revenue is by creating new services for their subscribers. This has come to mean new audio and video services. Today cellular carriers have to become content companies in order to mine the margins out of the various multimedia services.

On top of all new multimedia services we will continue to see growth in prepaid wireless. Prepaid service once carried the stigma of being provided to low income subscribers. Today prepaid service is all about smart cash flow management.