For communication services, these three trends are expected to impact growth in revenues:
- 5G introduction
- internet of things (IoT) expansion
- net neutrality legislation rollback
5G Rolls Out, But Phones Are Lagging Behind
The wireless industry is currently exploring deployment of fifth-generation (5G) wireless technology. 5G technology, which uses high frequency radio bands transmitted by numerous small-cell wireless facilities, is expected to greatly increase mobile device download speeds and reduce latency (the time between a cellular device’s sending of an information packet to the packet’s reception by the carrier’s communication facilities) to less than 1 millisecond. These capabilities will support further development in end-use applications, such as autonomous vehicles and augmented reality.
Select commercial deployment of 5G services is expected sometime in late 2018, while wider-scale deployment will occur later within the next five years. For example, AT&T expects to unveil 5G wireless systems in a dozen cities by the end of 2018. One potential slowdown is the absence of commercially available handsets able to use 5G networks, with phones capable of accessing 5G likely becoming widely available in 2019.
Internet of Things Grows, Though Security Issues Are Not Resolved
Demand for internet bandwidth is expected to increase with development of IoT technologies and products, especially in conjunction with 5G network deployment. IoT technologies are designed so that everyday objects, such as clothing, cars, thermostats, etc. are linked wirelessly through the internet. As a result, these objects are capable of sending or receiving data and making decisions based on their environment. Examples include:
- FitBit, a wearable smart watch designed to track personal health data
- the 2018 Cadillac CT6, which features built-in wireless internet access
- Nest, a home thermostat that can track local weather conditions and consumer preferences, adjusting house temperature as necessary
However, concerns have surfaced that vulnerabilities of IoT networks to security breaches have not been adequately addressed. For example, a team of researchers gained unauthorized access to a 2014 Jeep Cherokee car software remotely, including programs controlling the braking and steering systems. This vulnerability prompted a 1.4 million vehicle recall from Chrysler.
Net Neutrality Repeal Creates Uncertain Future
Net neutrality is a hot-button issue with wide-ranging effects on the communication service sector. The Federal Communications Commission (FCC) has oscillated on the extent and stricture of regulations over the past decade, culminating in December 2017, when the FCC voted to end net neutrality regulations adopted in February 2015. This vote replaced the old regulations requiring transparency and prohibiting blocking and unreasonable discrimination with a resolution simply requiring internet service providers (ISPs) to make public any blocking or throttling of internet traffic that the companies perform. The change created considerable dissent, as the US Senate voted to disapprove of the FCC’s action and the California Senate passed a bill requiring ISPs in the state to conform to previous FCC net neutrality regulations.
The effect of net neutrality repeal (which took effect in June 2018) on revenues for ISPs is unclear, as ISPs can now create different pricing tiers for companies, potentially boosting revenues as firms pay to ensure speedy data transfer over the internet. Nonetheless, both Comcast and AT&T have committed to not slowing down lawful internet traffic, leaving the willingness of ISPs to use tiered internet access as a revenue source uncertain.
For more insights into the US Communication Services industry, see Communication Services: United States, a report published by the Freedonia Focus Reports division of The Freedonia Group. This report forecasts to 2022 US communication services revenues in nominal US dollars. Total revenues are segmented by type of service in terms of:
- wireless internet
- wireless voice and messaging
- wired internet
- wired voice
- first-class mail
- other delivery services, such as parcel delivery and local delivery services
To illustrate historical trends, total revenues and the various segments are provided in annual series from 2007 to 2017.
Related Focus Reports Include:
About the Author
Owen Stuart is a Market Research Analyst with Freedonia Focus Reports, and his experience covers multiple industries.