BOSTON-North American wireless carriers risk losing billions of dollars due to the proliferation of Wi-Fi services, according to a new report from Strategy Analytics.
The consultancy said operators risk as much as $12 billion in projected profits as Wi-Fi service providers such as SBC, AT&T and MCI increase deployments and lower service fees. Increased provisioning of free Wi-Fi hot spots also poses a threat, Strategy Analytics said.
The report predicts that U.S. wireless operators will see a reduction in average revenue per user from $3.40 to $3.20 in 2005 due to advancing Wi-Fi services, and a reduction in projected 2008 ARPU from $10 to $7.20.
“It is not only a question of lower-cost alternatives for high-speed wireless access, but of more intense price competition for an expanding number of operators,” said Harvey Cohen, president of Strategy Analytics. “Operators, including Verizon, Cingular/AT&T, and Sprint/Nextel will make more than $100 billion in investments into advanced wireless capabilities over the next four years, but the returns may not be as high as initially expected due to the growing intensity of competitive forces.”
