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Small Business Wireless to Exceed Fixed-Line Voice for First Time in 2012

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Small Business Wireless to Exceed Fixed-Line Voice for First Time in 2012
August 18, 2011
By Gary Kim, Contributing Editor


Small business spending on wireless services will exceed spending on fixed-network voice for the first time in 2012, says In-Stat (News - Alert). Put another way, wireless services will become the single-largest category of small business spending, bigger than broadband access or fixed-line voice, for example. 

“Connectivity has become the life blood of businesses’ efforts, but it is particularly crucial to small businesses as many operate without a brick-and-mortar presence to customers,” says Greg Potter, In-Stat analyst. “One can already see the strength of wireless in 5-9 and 10-19 sub-segments. It is the 20-99 sub-segment, however, that will maintain the dominance of wireline voice through the end of this year.” Small Business Spending on Wireless Services to Overtake Wireline Voice in 2012

The trend will be strongest among firms with five to nine, or 10 to 19 employees, said Potter. Organizations with 20 to 99 employees will  continue to spend more on  wireline voice than wireless services, through the end of 2011. 

A separate study by the Small Business Administration in 2004 showed the importance of wireless in the small business segment even then. Wireless services in 2004 were used by 73 percent of survey respondents, and even then, 25 percent of small businesses already were spending more money on wireless than fixed-line voice services. Read the study here.. In 2004, about four percent of respondents already had gone "wireless only." About three percent reported using some form of VoIP.

Looking only at fixed line voice and mobility spending, wireless in 2004 already had reached 36 percent of small business spending, overall. Within various industry verticals, farmers already in 2004 were spending about as much on mobility as fixed-line voice. The typical farm reported spending $91.25 a month on fixed-line voice (long distance included) and $90.86 on wireless. 

In the construction industry, wireless spending already was bigger than fixed line spending, in 2004. The average amount of spending on wireless was $382 a month, compared to fixed-line spending of $262. That also was true in the transportation and warehousing vertical as well. 

In the information industry, wireless, at $243 a month, was just slightly less than fixed-line voice spending at $258.

Those patterns have implications for most providers of U.S. communications services. To the extent that broadband and voice are the two anchor services for most businesses, of any size, and that the mainstay for competitive local exchange carriers has been the basic bundle of "business voice and data," we have to assume a bigger shift by such firms to a triple play approach of wireless, fixed line voice and broadband. 

At a broader level, the shift is important for network economics as well. As fixed-line voice continues to dwindle, less revenue can be generated to support fixed-line networks, something industry executives are well aware of. 

One of the interesting observations one might make about AT&T’s (News - Alert) second quarter 2011 earnings results is the shift of revenue sources. Over the last year, consumer voice, which had contributed 23 percent of total revenue, in the latest quarter contributed just 20 percent of total AT&T revenue.  AT&T on Cusp of Return to Growth in Wireline Segment

In both consumer and business segments, wireless continues to grow as an anchor service, along with broadband. That is going to have significant ramifications for service providers of all sizes and types, in the years to come. That is not to downplay the importance of the voice revenue source, or the importance of innovation in voice. But the sheer fact is that, no matter what the industry does, fixed-line voice is a declining revenue contributor overall.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Rich Steeves

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