Mobile Operators Think Differently To Beat Recession

The carriers have seen steady revenue and growth during tough economic times because of smartphone growth and the fact that many users see cell service as a necessity.
While the global economic slowdown is hurting or eliminating multiple industries, the cellular operators are resiliently beating the recession, according to a report released Wednesday by Ovum.

The report said the global mobile operators have maintained growth in revenue and customer additions overall for 2008, although it was a lower growth rate than predicted. In the United States, only Sprint Nextel lost subscribers last quarter, and AT&T and Verizon posted strong first-quarter results that were buoyed by their wireless units.

The carriers are boosted by the fact that many now consider cell phones a necessity, as well as the increased adoption of smartphones that require mobile data services. For example, nearly half of AT&T's net new subscribers last quarter were iPhone users who signed long-term contracts with data plans.

"It is comforting that mobile operators have shown remarkable resilience," said Emeka Obiodu, senior analyst at Ovum, in a statement. "Whereas other industries have gone to the government with their begging bowls, mobile operators are actually pledging to invest billions to roll out a new high-speed mobile network. In fact, after scouring the world, we are yet to find any mobile operator that is calamitously struggling solely because of the recession."

Mobile operators aren't immune to a downturn, though, as other reports suggest subscribers will cut back on extra features like text messaging, mobile data, and mobile e-mail. Ovum's study said the carriers have done a good job to limit the impact of this by having multiple price plans, as well as implementing promotional services aimed at easing financial worries.

"While the short-term impact is limited, the recession will ultimately engineer a paradigm shift in strategic thinking across the industry," said Obiodu. "On the ground, the basics of the industry will surely remain the same, but the approach to service delivery will eventually change."

This shift could involve the operators opening up their data networks for a variety of devices beyond cell phones and laptops. Sprint provides the wireless data capabilities for Amazon's Kindle, but the service is dubbed Whispernet and bears no Sprint branding. T-Mobile has created "embedded SIMs" that can be used with power meters to create a more efficient power grid.

Most companies are just starting the hard work of mobilizing workforces by bringing the software they use to smartphones. InformationWeek analyzed this issue in an independent report, and it can be downloaded here (registration required).