Rtg Rica Fall Forum Richelle Elberg
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www.jsicapital.com THE FUTURE OF COMPETITIVE SERVICES IN RURAL MARKETS RTG/RICA Fall Forum, Phoenix, Arizona Richelle Elberg, Dir. and Sr. Analyst, JSI Capital Advisors November 3, 2011
Transcript of Rtg Rica Fall Forum Richelle Elberg
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THE FUTURE OF COMPETITIVE SERVICES
IN RURAL MARKETS
RTG/RICA Fall Forum, Phoenix, Arizona
Richelle Elberg, Dir. and Sr. Analyst, JSI Capital Advisors
November 3, 2011
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Predictions are hard to make…
especially about the future.
Yogi BerraModern Day Soothsayer
WHAT WILL THE FUTURE HOLD?
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ILEC ACCESS LINES: 2000 - 2010
Source: Phone Lines 2011
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QUANTIFYING THE TRENDS – THE BIG PICTURE
In 2010, we predicted that ILEC access lines would fall
from 115m at the end of 2009 to just 52m ten years
later—we considered this the “harsh” reality.
We also expected CLEC lines to max out in 2010, after
which they would decline at a pace similar to ILECs.
ILEC VoIP connections were expected to grow to nearly
17m by 2019.
We were wrong.
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THE NEWER, HARSHER REALITY
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THE NEW, HARSHER REALITY
Traditional ILEC access lines are now projected to decline
to less than 17 million by the end of 2020.
CLEC lines will continue to grow for a few years due to
focused operators targeting business customers, but
CLEC line losses will begin to occur in 3-5 years.
Shifting voice customers to VoIP will help, but…
Voice is no longer a primary service…it’s an add-on.
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DECLINES ACCELERATING THROUGHOUT THE DECADE
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ACCESS LINES ARE THE BUGGIES OF 1915
“By the early 1910s, the number of
automobiles had surpassed the number of
buggies, but their use continued well into the
1920s in out of the way places.
“Today, the term "horse and buggy" is often
used in reference to the era before the
advent of the automobile and other socially
revolutionizing major inventions. By
extension, it has come to mean clinging to
outworn attitudes or ideas, and hopelessly
outmoded, old-fashioned, non-modern, or
obsolete.” -- Wikipedia
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WIRELESS DEVICES ARE THE AUTOMOBILES…
Wireless penetration now exceeds 100% of the U.S.
population, and growth in wireless subscriptions is
actually accelerating, due to wireless data devices.
Tablets are on a steep hockey stick growth curve.
Texting is the dominant form of communication for the
Millenials (that’s the younger generation for you Baby
Boomers out there).
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US WIRELESS SUBSCRIPTIONS: VOICE/DATA & DATA-ONLY
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RESIDENTIAL VOICE MARKET SHARES 2007-2020
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THE OUTLOOK ON THE BROADBAND FRONT
ILECs have performed well in terms of growing their
broadband connections—if you consider DSL to be
broadband.
But DSL doesn’t provide the 4 Mbps download speeds
that the FCC is seeking in its new order on USF/CAF
reform.
Over time, the wireless beast rears its ugly head on the
broadband front too.
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BROADBAND SERVICE MARKET SHARES: 2007-2020
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RURAL MARKETS ARE A DIFFERENT BEAST
Different demographic characteristics in terms of average
ages and incomes
Lower population density changes the dynamics for
wireless providers
But states with lower average incomes generally have
higher cord-cutting in favor of wireless only
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TELEDENSITY, INCOME AND WIRELESS-ONLY HHS
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THE TRENDS LAG IN RURAL MARKETS…
• For telcos with less than 50k lines, losses slowed to between 3.5%-4.5% in 2010.
• In 2009, smaller companies lost lines at a 4.5%-5.5% pace.
• Thank Heaven for Small Favors!
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DISCUSSION AND QUESTIONS
Richelle Elberg603.986.6082
“The future will soon be a thing of the past.”
George CarlinLegendary Visionary
