Trend Still Holds: U.S. Telecoms Replace 1/2 Their Revenue Sources Every Decade

Some 12 years ago, US mobile data revenues were less than five percent of overall mobile industry revenues. In the second quarter of 2016,  mobile data revenue crossed the 75 percent threshold, according to analyst Chetan Sharma.

That is an important observation for several reasons beyond the obvious importance of mobile data as a revenue source.

As a fundamental analytical principle, I have argued for several decades that service providers must expect to replace half their current revenue about every decade, from new sources.

That has proven true In the U.S. telecom business for several decades, where lead revenue sources have, in fact, been replaced, about every decade.

In 1997 about 16 percent of revenues came from mobility services. In 2007, more than 49 percent of end user revenue came from mobility services, according to Federal Communications Commission data.

Likewise, in 1997 more than 47 percent of revenue came from long distance services. In 2007 just 18 percent of end user revenues came from long distance.

So the latest estimate by Chetan Sharma suggests the process still is at work. In turn, long distance revenue; then mobile; and now mobile data has become the key industry revenue driver.

The question is which new major revenue source will drive the next displacement? One suggestion is that the intense interest in Internet of Things and machine-to-machine communications signals a widespread belief that this is where the big new industry revenue will come from.