Another Mobile v Landline Tipping Point

While the gadgety types were watching CES last week, suits in the US telecom industry were watching comments out of an investment bank conference in New York. AT&T’s CEO Randall Stephenson gave investors something to worry about when he commented that the company was seeing weakness in its consumer business — a statement many interpreted to mean that the economic malaise in the US was causing some problems in the mobile business, a sentiment that got reinforced by a couple pieces of research saying two US operators would disappoint on the subscriber-addition front this year.

Two points to counter that, though: first, as I’ve said before, the market is getting closer and closer to saturation in terms of subscribers — so subscriber growth will inevitably slow.

Second, analysts and economists talk about cutbacks in discretionary spending during a recession, and extend this to cover mobile spending. But even in the US, I’d say we’re well past people seeing a mobile phone as an extravagance or as discretionary spending — I’d say most people see their mobile as more indispensable than their landline. That’s the risk for a company like AT&T, that belt-tightening by consumers will lead them to stop spending on extraneous things, like their landlines.

The impact of an economic slowdown on mobile content in the US is up for debate, though. Much of the content being discussed — ringtones and wallpapers and the like — are on the wane already, but I think it’s possible that an economic slowdown could give a boost to other mobile content and services, provided that they come at the right price. If consumers cut discretionary spending on things like, say, movie tickets and CDs, they’ll be looking elsewhere for entertainment. If a user already has a mobile data subscription or messaging plan, they might be looking to make more use of it; if a user can take the dollars they’d put towards a two-hour movie ticket and get a month’s worth of mobile data access — and all kinds of free or ad-supported content and services along with it — it might be a much more compelling buy.

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