Kagan: What’s up with AT&T, T-Mobile US and Verizon wireless performance?

When will significant growth in wireless start-up once again?

Today, the wireless industry seems stuck between growth steps. In fact, this problem has been haunting the industry over the past decade. Normally, this happens at the end of one G cycle like 5G, before moving to the next step. This time things seem different. This tough stretch is lasting much longer than others in the past. So, let’s take a closer look at what is happening in wireless, both network services and network builders, and when we can expect to see the industry grow once again.

Earlier in the week I gave an interview on Schwab Network News addressing this topic. Let me share some of the highlights with you here.

As a well-known Wireless Analyst and advisor, I am fortunate to get the opportunity to speak with senior executives of competitors in the space. Both from the network and network builder’s side of the fence. 

The questions every investor wants answered is when will growth get back to the traditional level?

Speaking with leadership of wireless companies reveals concern

Over the years, AT&T and Verizon have shared their plans to expand beyond the traditional wireless space and the world of G’s, like 5G today into the areas of entertainment and ecommerce. 

That turned out to be a mistake for both AT&T and Verizon. Acquiring Warner Media, CNN, Warner Brothers Studio, DirecTV, AOL and Yahoo was a gutsy move. However, afterwards such a drastic move to corner the market on entertainment and communications failed for both of them.

Now, once again AT&T, Verizon and T-Mobile, along with every wireless provider are focusing on the core of 5G, 6G, wireless, broadband, data, telecom and more.

How do AT&T, T-Mobile and Verizon keep investors satisfied?

The problem this time around is 5G has not had the same kind of kick as usual. And because these are public companies, they still need to create the next big growth wave to keep investors satisfied.

The wireless industry has historically had an ongoing pattern of growth, in steps. As they move to the next G like 5G, it creates growth for several years. 

This ebb and flow keeps investors happy for a while. 

However, they need to keep feeding the fire. As years of growth, it begins to slow until they move to the next step like 6G.

This time 5G is not creating the same growth wave as it has in the past. Apparently, there just are not as many new customers to compete for.

Plus, the weak economy also creates a problem. Users want to save money. That means not upgrading their device every year and it could also mean using less wireless data. 

These are real problems and challenges.

Wireless network builders like Qualcomm, Ericsson, Nokia, Huawei, ZTE

That’s why every wireless carrier like AT&T, T-Mobile, Verizon and all the resellers, plus all the network builders like Qualcomm, Ericsson, Nokia, Huawei, ZTE and the countless smaller competitors are not seeing the kind of growth they have experienced in the past.

They are still spending and still earning but based on what I see, it does not seem to be at the same pace as in the past. 

So, something big needs to occur and quickly. What we are starting to see now is several new technologies making inroads.

New tech like AI and IoT are obviously important to every wireless company. And this will play an increasing role going forward. 

FWA is creating a new service called 5G wireless broadband. This is a new service being offered by wireless carriers. FWA is also a new competitor to the cable television broadband offering.

AI, IoT, FWA, DOCSIS, wireless broadband, private wireless and more

That means cable TV must come up with their own competitive answer to wireless broadband. I met with several young competitors in this space like Air5 and Air Wireless. These use a wireless DOCSIS technology to accomplish this goal.

Both FWA and wireless DOCSIS are new players, so we will have to wait and see how they develop moving forward and how well they compete with each other.

Private wireless and private shared wireless are also new services. There are many smaller providers in this space with new technologies.

The problem is smaller competitors have the bold, new ideas, but not the deep pockets or brand name recognition of the larger competitors. 

M&A wave has begun in private wireless

We are starting to see the next wave in private wireless involving M&A. Larger companies like HPE are acquiring smaller companies like Juniper Networks. 

This helps HPE get into private wireless and helps Juniper Networks with their financial squeeze. Hopefully merging will solve both of their problems.

I expect to see more M&A going forward in this sector.

These are a few of the new areas the traditional wireless, telecom and cable television industries are moving into.

Some wonder if these ideas will be the real growth driver moving forward or whether they are just a filler until the industry hits the next, real growth chapter in the wireless and broadband story. 

We will have to wait and see what happens next. 

Wireless and broadband growth remains strong, but needs acceleration

Every industry is shifting. Traditional cable TV as well as traditional telephone service is drying up. They are being replaced by new technology like broadband, streaming, wireless, private wireless, wireless broadband and more.

Remember the wireless and broadband industry remains one of the most important new technology areas we have ever seen. This will not change. In fact, it should only continue to accelerate. However, the direction may shift to new technologies for growth.

Networks and network builders need to continue to show real and solid growth. 

The CEOs and top management of the companies I speak with all seem to know the problem. However, their strategies to deal with it and attract new business are often quite different. 

Wireless remains one of the strongest, core technologies ever

So, what is the next, big step forward? Besides moving from one G to the next, in wireless the last, big step was almost two decades ago when iPhone and Android entered the marketplace. It was when wireless data exploded with growth from a few hundred apps to two million.

That was back in the days when Blackberry, who led the way for a decade, suddenly vanished from the list of top players. They joined Motorola who also once led the decade before at the bottom of the list of competitors.

The wireless industry will continue as one of the most important technologies of our lifetimes.

Growth in wireless means the industry needs to focus on new products and services. Traditional growth has slowed. New growth in new areas is where the focus should be going forward.

This is a painful time as the industry faces growing pains and searches for the next, big growth wave like they did with wireless data nearly 20 years ago.

Plus, with the weak economy, users are looking for ways to save money so they are not upgrading as quickly as they should. That may slow the process as well.

So, there are still many challenges. Who knows when everything will shake out and start to grow once again. And who knows where that growth will come from. 

That being said, I firmly believe wireless will remain a key technology with growth in the future. New technology like AI and IoT will help that occur. We must first get through these days of unsettled stress and slow growth.