Communication Markets Do Not Conform to Share Patterns We See in Other Industries

Communication markets do not seem to conform very well to market share patterns one tends to see in many other industries where market entry is less capital intensive.


Put simply, a predicted pattern would have the market leader having share and profit margins double that of number two, which in turn would have double the share and profit margin of supplier number three.

Mobile service provider markets do not conform to the pattern. That is because, many could easily argue, mass market communications tends to be an oligopoly, not a monopoly or highly contested market with few barriers to entry.


In an oligopolistic market, a reference market share structure might be something like:


Oligopoly Market Share of Sales
Number one
41%
Number two
31%
Number three
16%


U.S. mobile service provider market structure deviates from the “classic” pattern one might expect. One might note the same is true in other mobile service provider markets, such as the Russian Federation. The same divergence exists in the Indian mobile market.


One might argue that a coming wave of U.K. industry consolidation could lead to a more traditional industry structure. That also could happen in the French mobile market, which still in 2012 had an “uncharacteristic” structure.


The Canadian fixed line triple play market likewise differs from a theoretical market share distribution. U.S. fixed service market share might have the same pattern, though in a growing number of markets, there is instability, as a big cable TV firm and a legacy telco now face competition from Google Fiber, for example.


It is at last conceivable that market structure in the fixed line market could change significantly, assuming Google Fiber emerges, in virtually all of its chosen markets, as the market share leader for Internet access.


Also, market share structures could assume a more traditional distribution once all communication markets are consolidated, and there is not a clear distinction between fixed and mobile services.


Whatever the reason--and many will argue it is sheer capital intensity--communication markets do not conform to patterns we might routinely expect to see in many other industries.

Since 2012, the possible fourth wave of mobile revenue growth seems to have clarified, at least in terms of expectations. Most observers might now agree that the Internet of Things represents the biggest future revenue opportunity.
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