If greater supply of a ny product tends to produce lower prices, and lower prices tend to lead to greater consumption, then one can predict that mobile prices are headed lower, and mobile data and voice consumption is headed up, as vast new changes in the supply chain take place.
South Asia and Southeast Asia will be affected more than the U.S. market, initially. Eventually, the U.S. market will face greater disruption than seen in South Asia and Southeast Asia, though.
Those greater supply will come from the issuance of additional spectrum for communications, more-efficient use of existing spectrum, lower-cost platforms and market entry by a mix of large and small new competitors.
In some cases, though the immediate changes are incremental, the longer-term changes could represent an order of magnitude (10 times) or even two orders of magnitude (100 times) more capacity.
It is hard to see how anything other than business model disruption will happen, as a result of those changes. In fact, J.P. Morgan equity analyst James Sullivan believes mobile business models are unsustainable across parts of South and Southeast Asia.
In the near term, the challenges are likely to be incremental, rather than market shattering.
In Southeast Asia, spectrum allocations in the second half of 2016 will intensify telecom competition in Indonesia, Singapore and Malaysia, as regulators are preparing to reallocate spectrum for mobile data services, Fitch Ratings says.
Though additional spectrum does not always lead to greater competition, it appears regulators will allocated the new spectrum in ways that do so. In Singapore, some spectrum will be set aside to support a new competitor. In Indonesia new spectrum likely will be allocated to allow some contestants with less spectrum to gain greater parity with the spectrum-rich firms.
In Indonesia, it will be crucial for fourth-largest telecom operator PT Hutchison 3 Indonesia (Hutch) and the largest mobile operator PT Telekomunikasi Selular to win new spectrum in the upcoming assignment.
Hutch has the smallest spectrum holding among the four largest Indonesian telcos. Meanwhile, Telkomsel still serves a large 2G market and will require additional spectrum to cater to its growing 4G subscriber base.
Some 48 percent of Indonesian mobile subscribers are still on the 2G network. Indonesia's Ministry of Communications and Information Technology is scheduled to announce the spectrum assignment of two 5MHz blocks of 2100 MHz, and two 15 MHz blocks of 2300 MHz later in 2016.
In Singapore, the Infocomm Development Authority's decision to lower the reserve price of the total 60 MHz spectrum set aside for a new mobile network operator (MNO) and double the allocation in the 2.3 GHz band to 40 MHz, are expected to increase the amount of competition.
An October 2016 auction will set aside 2x10 MHz in the 900 MHz band, and 40 MHz in the 2300 MHz band for a new operator.
Fitch believes the smaller spectrum allocation in the 900 MHz band for the incumbents Singapore Telecommunications Limited, StarHub and M1 will result in the companies boosting their capital spending over the next two years, as the new operator is expected to compete on price to gain market share.
The spectrum reassignment by the Malaysian Communications and Multimedia Commission in 2016 also is likely to intensify competition in Malaysia.
As in Singapore, the emphasis for new spectrum seems to be to support smaller competitors. The third-largest mobile operator DiGi and mobile virtual network operator U-Mobile will benefit from a larger allocation of the coveted 900 MHz spectrum.
Fitch believes this will enable them to challenge the market leaders Celcom and Maxis, whose allocations for 900 MHz and 1800 MHz have been reduced.
Celcom and Maxis also are likely to build more cells, and densify their networks, to make more-efficient use of their spectrum, as a result.
Fixed-line operator Telekom Malaysia also will enter the mobile services business with unlimited data, SMS and voice plans.
Bringing stakeholders together to understand changing supply and demand issues, and the business model for Internet access, is a key focus of the Spectrum Futures conference. New lower-cost platforms and huge increases in spectrum supply are among the issues to be discussed.
Here’s a fact sheet and Spectrum Futures schedule.