Will the Cord Cutting Trend Jump to Mobile?
Will mobile carriers soon experience an uptick in customer cancellations for phone calling services?
Some have predicted that phone providers may experience a trend that is very similar to the cord cutting phenomenon that has impacted cable companies.
In the latter scenario, a cable TV customer opts to cancel their contract with their cable provider (e.g. Comcast). They then use their Internet connection to get their TV shows, using a streaming device like a Roku and a streaming service such as Sling TV.
Indeed, EMarketer, a New York research firm, predicts that nearly a quarter of U.S. households will have cut the cable cord by 2019.
So, what are the implications for mobile carriers? Just as consumers have found lower-cost solutions for TV, consumers now have lower-cost options for making phone calls.
Affordable over-the-top (OTT) options for voice calling are available from Google, Skype and Viber. With a data-only plan and an app for making phone calls via the Internet, a consumer could in theory save a fair bit of money. That's not an entirely viable solution at the moment. The top carriers typically don't offer a data-only plan and many apps are still not as reliable as a traditional cellular phone call. But carriers will have to be clever to avoid a big hit to revenue streams.
My take on this is that it is unlikely that mobile carriers will be pushed out completely by new providers. Still, the competition will be stiff. Surviving to thrive will require that carriers think outside of the box.
My company Infinite Convergence has helped the top carriers successfully navigate these large industry shifts before, developing products that keep customers engaged and reduce churn. What I've learned from these experiences is that denial is a recipe for disaster. The smart mobile carriers recognize that innovation is the key to coming out on top, and many already have initiatives underway.
If this topic is of interest to you, you'll enjoy my latest Wireless Week column, What Mobile Carriers Need to Know About the Cord Cutting Phenomenon. As always, I welcome your comments and questions.