Speech Summaries

Charles S. Golvin Principal Analyst Forrester Research, Inc.

Displacement Will Reshape The Telecom Business

Charles S. Golvin, Senior Analyst, Forrester Research, discussed the coming wave of displacement and how it will reshape the telecom industry.

Displacement -- the shifting of consumer spend from old telecom services to new -- will impact traditional telecom service providers in the long term, as consumers increasingly utilize wireless and broadband service in place of fixed-line, long-distance, and dial-up services. Expect to see fixed-line and dial-up subscriptions shrink by 8% and 67% respectively, while wireless will grow by 63% and broadband by 394% by 2006.

This phenomenon is inevitable as consumers enjoy new features, cost reduction, and the better user experience available from new telecom services.

To survive, each type of carrier must embrace displacement depending on the type of network they own. Displacees must cap circuit investment, invest in packet networks, and shed unprofitable customers. Hybrid carriers should promote the ability of their new networks, tie old and new offerings together, and link broadband and wireless together to create revenue-generating applications. Displacers must unify their back-end systems to enhance customer service, trim operating expenses, and depend on retail companies to sell their services.

Questions And Answers

Q: Do you believe wireless LANs will displace wireless and 3G?
A: No, they are complementary to those services. They must coexist. Wireless providers and broadband providers will provide both of those services where users want to use them.

Q: What effect will Virgin Mobile have on the prepaid market?
A: There are not a lot of customers who don't have mobile service today. For less affluent consumers, prepaid will be a great way for them to adopt mobile. Virgin understands this. It plans to use better provisioning services to increase the profitability of its service to low-revenue customers, such as prepaid.