Generally speaking, the wireless industry depends almost entirely on regulatory oversight provided by the Federal Communications Commission (FCC), a government organization responsible for the regulation of allocation in the United States with respect to determining two critical features of any carrier’s enterprise. For one, they make the decision on which frequencies will be utilized, for what purpose, and through numerous auctions, delivers to carriers that propose the highest bid. However, the most significant decision is surrounded precisely around the frequencies’ attributes, such as allocation of bandwidth, which poses a massive differentiation in equipment pricing for the deployment of a given network. In the event that frequencies are auctioned off which are not already established such as those at 1700 MHz, costs can reach astronomical levels (Koutropoulos, 2017). Secondly, the Fair Trade Commission (FTC) is also responsible for regulation within the same industry. In the past several years, multiple and major corporate consolidations occurred including that of Sprint/Nextel and AT&T/Cingular Wireless. For each case, the FTC was necessary to adjust the allocations of spectrums that each company possessed as when significant acquisitions or mergers occur, the FCC demands that the spectrum be divested again to then be sold off (Koutropoulos, 2017).
At the forefront of the wireless industry is technology, yet development on innovative new features often takes 5-10 years of research before momentum is gained and as a result certain breakthroughs are considered disruptive while others simply evolutionary. The economic environment is defined by the margins of service that each carrier offers. Given this, they each stand at a direct disadvantage given that they are all engaged in competition with one another and the general trend in winning over sales from customers includes a race to the bottom in price. This war continues to force the margins thinner and thinner each year. Furthermore, carriers are noted for their aggressive subsidization on handsets which costs them more and more due to the fact that customers constantly expect phones of exponential complexity and new features at cheaper prices (Koutropoulos, 2017). While they incur such expenses, they also possess expenses with respect to land purchases, leases, and spectrum purchases in order to develop their towers and equipment for infrastructure. Although each of these expenses are typically the standard costs when conducting in such a saturated industry, they are expenses which make it difficult to meet budgets and generate profit revenue.
With respect to the social environment, there are a trilogy of segments that are critical to success in the industry. For one, there is an area designed to acquire simple and basic communications, as consumers that acquire phones for free offering such general features characterize this. Moreover, there is a segment that is strictly for business and encompasses corporate executives and employees, a group of individuals that are typically interested in increased service availability and data services such as email. For a number of years there has been a link between the two aforementioned groups that demanded higher quality handsets and those that offer a variety of functionality. This portion typically focuses on acquiring devices that characterize the product as a smartphone, with GPS navigation, built in software applications, fast connectivity to the Internet, instant text messaging, advanced cameras, music playback, etc. Before, this segment was delegated under the category of power user given that its base of customers used to be quite small when compared to the rest. In the modern world, nearly every single citizen of middle class income (or even lower class) has the capacity and demand for the most advanced mobile devices on the market, despite the growing costs that carriers charge to purchase them (Mills, 2017). Economists project that the industry stands at a inflection point, and T-Mobile’s low cash holdings will require them to invest as much as possible into 5G to win back customers (Kramer, 2017).
- Mills, C. (2017, August 27). T-Mobile’s plan is working: Customers actually like the network. Retrieved January 14, 2018, from http://bgr.com/2017/08/27/t-mobile-vs-verizon-best-unlimited-2017-customer-satisfaction/
- Koutropoulos, A. (2017, January 11). T-Mobile: Strategic Analysis. Retrieved January 14, 2018, from https://www.researchgate.net/publication/254694273_T-Mobile_Strategic_Analysis
- Kramer, M. (2017, September 18). How Verizon and AT&T Will Crush T-Mobile. Retrieved January 14, 2018, from https://www.investopedia.com/news/how-verizon-and-att-will-crush-tmobile/
