Industry Analysis
Industry Overview
Wireless
Overall, wireless telecommunications is a mature industry with a high penetration rate. The penetration rate for the industry overall was 69% at the end of 2005, 91% at year-end 2009, and 102% by the end of June 2011. As the rate passed 100%, the postpaid subscriber growth has been slowing down. However, strong growth in prepaid subscribers and connected devices such as tablets, e-readers, and gaming devices make up for a solid growth of the industry as a whole.

The wireless industry is highly consolidated with the top two companies, AT&T and Verizon, making up for 65.7% of total wireless subscribers at the end of 2011. When it comes to the postpaid market, the two companies are even more dominant with 70.6% of market share at the end of 2011. Their churn rates, which measure percentage of customer that terminates the service, are significantly lower than those of other companies (see table 1).

There are two noticeable trends in the market due to the economic downturn and the high penetration rate. In a struggling economy, subscribers will continue to prefer prepaid over postpaid. Many carriers now offer prepaid plans with unlimited voice, messaging and data, and have started to offer smartphones and tablets. Prepaid accounts comprise 24.5% of the net additions, compared to 18.3% of the net additions in third quarter 2011. Additionally, in an industry with a penetration rate higher than 100%, companies want to maximizing revenue per subscriber over maximizing number of subscribers. Companies can achieve this through pricier data plans and new 4G networks.

The future revenue driver for the industry depends on control over spectrum licenses, the development of the 4G LTE network, and the growth of smartphone and tablets. These are new and fast-growth markets that will generate significant shares of revenue for companies in the industry over the next couple years. Smart phones and tablets required a high-speed network such as AT&T’s 4G LTE network to operate and run smoothly. These networks require large amounts of wireless spectrum, the frequencies of radio waves that are available for use for communication and governed by the Federal Communications Commission (FCC). The more spectrum one company has, the better the communication between its customers. In early 2008, the Federal Communications Commission (FCC) conducted Auction 73, in which licenses at the 700 MHz frequency band were sold for roughly $19.6 billion. The spectrum was divided into five blocks, and the carriers that won the licenses would use the spectrum for the development of 4G LTE network.

Wireline
Overall, companies in the industry see declining sales in their traditional wireline business. This has been partially offset by customers migrating to

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Industry Analysis And High Penetration Rate. (July 10, 2021). Retrieved from https://www.freeessays.education/industry-analysis-and-high-penetration-rate-essay/