In 1990’s economists’ dreams were made with the start of competitive telco markets. Twenty years later those markets have resulted in consolidation to three or four suppliers. Usually the children of the original telco monopolists.
To increase revenues telco’s have grown through mergers. Regulators believed three was a magic number. In theory leaving just enough suppliers for competition to exist. But that’s now changed as the experience has been different. When new entrants enter a market, prices fall. Free’s noisy 2012 French entrance did just that, even as spending on infrastructure kept increasing. Now, regulators globally are stopping mergers.
But with in-country mergers blocked how can telco’s grow revenues if competition caps prices?
The answer appears to be in data. Telco firms make about half of their revenues from data. With mobile-data volumes rising by 60% to 70%, a year investment to transmit bytes makes sense.
All this means that business customers now have an advantage with telcos. Metered consumption is no longer the default and service prices are now fixed. With the caveat that exceptional usage isn’t tolerated. Apologies to John Szaszvari’s who downloaded a terabyte of mobile data during a free data giveaway.