Cellphone Companies Predicted to Go Extinct by Year 2020?

November 19, 2014

Cellphone Companies Predicted to Go Extinct by Year 2020?

Say Good-bye to Your Mobile Carrier come 2020. Cellphone Companies May Be Going Extinct.

Phone Companies - Gephardt Daily

No longer the realm of coffee shops and homes, Wi-Fi spans entire neighborhoods. Trains, planes and automobiles are Wi-Fi equipped. Cruise ships have Wi-Fi. Comcast has even made every customer’s router into a public Wi-Fi hotspot.That’s good news if you’re a cell phone user. The more you email, watch Netflix, stream Pandora and surf Facebook over Wi-Fi, the fewer gigabytes you have to buy from your cell phone company. Plus, calls and texts are now able to be sent over Wi-Fi too.

Broadband customers that actively use Wi-Fi on a regular basis save more than $30 per month on their wireless bill, according to a Macquarie Group survey published last week.

So what do you need your cell phone company for?

In Europe, many cell phone owners have already ditched their wireless carrier. But Wi-Fi isn’t quite widespread or robust enough for most Americans to completely ditch their wireless carrier just yet.

Some people are also (rightfully) concerned with the security of public Wi-Fi. A new generation of hotspots lets you seamlessly switch between Wi-Fi and 4G-LTE service, and they offer improved encryption. But Wi-Fi’s security issues likely won’t be resolved by 2016, Macquarie predicts.

Google tests Wi-Fi balloons

“It will be several years before the majority of U.S. consumers even contemplate dropping their LTE vendor in favor of an add-on public Wi-Fi service from their cable company,” said Kevin Smithen, analyst at Macquarie. Still, the clock is ticking for 4G.

4G’s limitations are inherent in the technology that makes it work: Airwaves are limited, and you can only cram so much data into one MHz of spectrum.

That’s why the two biggest carriers — AT&T and Verizon — place data caps on their customers. Only about one-third of U.S. cable customers have an idea of how much data they’re downloading each month on their home Wi-Fi networks, but two-thirds of wireless customers track their usage, according to Macquarie.

Cable companies are already working on an alternative. The major broadband providers have banded together, linking up their Wi-Fi networks across the country and even in many countries overseas. The FCC is also making a large, new swath of airwaves available for Wi-Fi,which cable giants are sure to fight for.

That’s potentially a big threat to the Big Four U.S. wireless companies. Verizon, for example, could be offloading as much as a quarter of its mobile data traffic onto Wi-Fi networks by 2018, Macquarie predicts, costing the company nearly $1.4 billion a year in lost revenue.

Verizon could recoup those lost sales by partnering with cable companies like Comcast. Verizon could sell Comcast its wireless airwaves, providing Comcast with a 4G “quad-play” option.

That’s why wireless carriers will likely be jockeying for position to partner with cable companies, particularly Comcast. With Sprint’s (S) sub-par 4G network, AT&T’s ties to U-Verse, and Verizon’s FiOS and congestion issues, T-Mobile (TMUS) is the likeliest wireless company to win over Big Cable, Macquarie predicts.