LOS ANGELES – Analyst Chetan Sharma held the attention of his late-afternoon audience at this year’s HetNet Expo without even discussing small cells or DAS. An adviser to wireless players ranging from China Mobile to Qualcomm, and to new players in mobile including Microsoft and Facebook, Sharma spoke to the audience about the future of wireless revenue streams.
Sharma’s vision of the future is based on lessons from the past. His data show that carrier revenue from both voice and messaging peaked when penetration reached roughly 70%. Now data penetration is approaching 70% in the United States. Sharma foresees data revenue declining as revenue from services and applications takes off. He said that last year revenue from services delivered over mobile networks surpassed revenue derived from providing access to those networks. It’s a trend he believes will accelerate.
“In the U.S. we may have a two- to three-year runway before data revenue starts to taper off,” said Sharma. “The industry has to invest in the fourth wave: [over-the-top], the application layer.”
Clearly, carriers are thinking along the same lines. Verizon just paid $4.4 billion for AOL, and AT&T spent 10 times that much to acquire DirecTV, securing key content like NFL football games in addition to a new distribution channel. Sharma noted that AT&T and Verizon Communications have other service initiatives as well.
“You see them investing in a lot of the OTT plays: connected home, connected car, video,” Sharma said. He thinks the investment in services sets AT&T and Verizon Communications apart from smaller competitors, as well as from some of the major carriers in other countries that continue to focus on network access.
“Some operators are just access players who move bits, but others are enablers, and the final level is the operator becomes the OTT – they can manage the stack from end to end, from access to application layer,” said Sharma.
For infrastructure providers, Sharma expects “5G” technologies to become contributors to revenue within the next few years.
“The LTE cycle has maxed out in the U.S., and 5G will kick in in a year or two,” he said. He expects to see a continuation of investment in wireline networks and Wi-Fi infrastructure. “Wi-Fi and fixed are fundamental to the economics of delivering bits,” he said. “Wireline, at least for the foreseeable future, will always be ahead of wireless.” He added that the picture is very different in less-developed countries that do not have wireline infrastructure.
