What Revenue Sources Drive the Next 50% Growth?
As a rule, I expect that any given communications service provider will have to replace about 50 percent of current revenue about every decade. Among the best examples (because we have the data) is the change in composition of U.S. telecom revenues between 1997 and 2007.
Back in 1997, nearly half of total revenue was earned from “toll” services (long distance, including international and domestic long distance voice. Profits also were disproportionately driven by long distance services.
A decade later, toll service had dropped to 18 percent of total revenue, while mobile services had risen to about half of total revenues, up from about 16 percent of total.
A similar trend can be noted for European Union mobile revenues between 2010 and 2018, a period of less than a decade, but still a time when voice revenue dropped from about 80 billion euros to about 45 billiion euros, while messaging dropped from about 19 billion euros to perhaps 10 billion euros and mobile internet access grew from about 18 billion euros to perhaps 42 billion euros.
The point is that revenue sources changed at least 50 percent over eight years. So the big question now, in developed markets, is what will replace mobile internet access, voice and messaging revenues over the next decade, when half of current revenues, it must be assumed, will disappear.
That is why--for better or worse--internet of things, video entertainment, application, platform and other ultra-low-latency services are so important. If there are other candidates for revenue replacement, it is hard to say what they might be.