| This is very big... ... remember: every 3-4 seconds, either VZ or T or Q lose an access line. That's $5-6 in bottom-line profitability per month disappearing every 3-4 seconds, 24 hours a day. (2.7 million access lines lost in Q2 between the ILECs at 3 seconds; 2.0 million access lines lost if you assume 4 seconds). I'm betting 3 seconds now.
If Sprint markets this effectively (I can see their version of the VZ Wireless "sprinkles" commercial now), which is a big if, they will make up for the need for fast-follow to Simply Everything plans (which did not crash the network).
What's also impt to understand is the effect on cost of service. Terminating a call to another wireless carrier avoids access charges (wireless companies cannot collect them). So I trade a call that would have been made to Frontier landline in Rochester (1 cents/ minute in state, what a scam) for mobile at free - that's 10-25 cents of savings for one call. Now let's talk Iowa in-state calling.... The RLECs hurt from this disproportionately.
The headaches only increase for T and +VZ if they match (I don't know what I would do if I were Q). This automatically creates problems for them as their wireless networks will be handling more incoming calls from Sprint! Meaning more overage and more strain on their wireless networks.
It all hinges on marketing.
It could really get better with free femtocells. |
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patcat88
join:2002-04-05
Jamaica, NY
kudos:1 | quote:
Wireless carriers are not subject to all the obligations of an incumbent carrier,11 including the
general obligation to negotiate in good faith. Only when a wireless carrier requests
interconnection and reciprocal compensation does the 1996 Act require the carrier to negotiate in
good faith.12 The Commission has approved hundreds of agreements between wireless carriers
and ILECs, derived through negotiation, arbitration, and the adoption of terms approved in prior
agreements.
»www.puc.state.mn.us/portal/group···8592.pdf
Wireless providers can collect termination charges as any other carrier can, they can't justify the price as being a rural provider having to provide universal service (see freeteleconference.com). |
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| agreed. I stand corrected. I should have said that no wireless carriers are currently collecting access charges. They are collecting recip comp charges where they can but recip comp is dramatically lower per MOU revenue.
That said, thanks to companies such as Neutral Tandem, many wireless-2-wireless calls, especially local ones, are either bill and keep or are at about $0.002 or 80% lower than the $0.01 Frontier example. TNDM's average yield is $0.0002 per their 10-Q. I'd take 500 MOU at $0.002 ($1 in CCPU) over terminating to wireline carriers (500 = $3.00 or so in CCPU) anytime. The extra $2 adds 3-4% to Sprint's margins (ARPU of $55).
It will be interesting to see how they respond. That access revenue is very high margin, and losing Subscriber Line Charges from more cord-cutting isn't fun either. |
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iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
 ·Comcast
| reply to wildcat man
What's really fun is the fact that Sprint doesn't have a landline base to cannibalize, so this is nothing but a win for them. They get to laugh all the way to the bank as landlines become even more of a cash drain.
That said, this also means that people can't do unlimited calling to/from VoIP under the current arrangement. So technically the ARPU will tend to be higher because wireless is more expensive than VoIP. So it goes both ways. |
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patcat88
join:2002-04-05
Jamaica, NY
kudos:1 | said by iansltx:What's really fun is the fact that Sprint doesn't have a landline base to cannibalize, so this is nothing but a win for them. They get to laugh all the way to the bank as landlines become even more of a cash drain. That said, this also means that people can't do unlimited calling to/from VoIP under the current arrangement. So technically the ARPU will tend to be higher because wireless is more expensive than VoIP. So it goes both ways. There is also MetroPCS/Cricket thats biting at Sprint and the rest of the big 4. |
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iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
·Comcast
| True, however MetroPCS doesn't have a 3G network and CricKet doesn't have a very strong one. They also have limited coverage and expensive roaming. Though you're right, they're injecting some competition into the market. Both here (Denver area) and home (between Austin and San Antonio) have CricKet service, though back home it's very weak. |
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patcat88
join:2002-04-05
Jamaica, NY
kudos:1 | Problem with MetroPCS/Cricket is, they have ZERO intention to serve far flung bedroom communities and rural areas. They target high-density urban areas, and thats it. And most people, they don't travel all over the place, they stay in their city/neighborhood, school, job, home, supermarket, strip mall, supercenter, fast food, thats it. So MetroPCS/Cricket are very cutthroat competitors to the big 4. And the big 4 will never beat MetroPCS/Cricket in profit per subscriber, excluding debt service.
If I were one of the big 4, I would file a dumping, price fixing, market division, etc lawsuit on Cricket/MetroPCS. |
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