Those of you who remember the monopoly period of telecom have by now gotten quite used to how different a competitive framework really is. But some analysts predict we might already have passed the absolute peak of competition, in most markets, globally.
What follows is not so clear. It seems unthinkable that we ever can return to the old days of sanctioned monopolies. But we have gotten comfortable (or at least resigned to the situation) with marketplace-created oligopolies.
What might come next could be equally unsettling, if present trends (lower average revenue per user, subscriber saturation, more-expensive networks) persist, could be quite a change.
Simply, if the typical “telecom services provider” can earn less revenue, at lower profit, than presently is the case (or has been possible in the past), then consolidation is inevitable, to boost both revenue mass and allow higher sustainable profit margins.
The big challenge for policymakers then will shift to frameworks that promote investment and competition where there are far fewer suppliers able to remain in business.
Though it seems unthinkable, some executives within the U.S. cable industry, for example predict and favor the emergence of a single cable company with national scale. Regulators have opposed such a situation in the past, and have taken steps to limit the total market share any single cable company, or telco, can have.
And though it might seem equally unthinkable, if that single cable operator emerges, is there room in the market for two “telecom” operators with national scale? Might the new oligopoly consist of one big cable company and one big telco? In other words, might the former duopoly (of one cable company and one telco) become an even-bigger duopoly?
Where today one cable company and one telco--but not the same telco and cable company--compete in virtually every market, could consolidation produce a situation where the same telco and cable company compete across 90 percent of the U.S. market?
That would require a historic change in in thinking about permissible market share. Many observers would worry about the reduced competition. But it also is possible that competition migrates elsewhere in the ecosystem.
Some might argue that already is happening, as app and device providers take more share of the “telecom spend.”
Such a development would not preclude the existence of many smaller specialists, even some with facilities. Firms serving rural areas and metro specialists might continue to exist. But the “access” function might become much more consolidated.
How much that could matter remains to be seen. If surviving service providers have moved “up the stack,” then perhaps much of the competition will occur there, and not at the level of access. Most executives at service provider organizations might be quite happy, were that to be the case, as it would means that their organizations indeed have moved “up the stack,” and earn much of their revenue from applications, platforms and services, not access.