Dean Bubley: It will only get worse.....

Dean Bubley posts his thoughts about Vodafone's disappointing future outlook at his Disruptive Wireless blog. The first thing Bubley stated is that the market has not yet priced in "what seems apparent to everyone I meet: that margins in the cellular business are going to face continuing pressure, despite the promise of whiz-bang new services and networks."

Bubley also notes that "the likely additional pain from IP-derived pressure on roaming, plus price erosion for indoor and fixed "nomadic" use of mobile phones is not yet priced in." As Bubley points out:

customers (and competitors / substitutes) are waking up to the fact that the "mobile premium" on voice pricing is only acceptable when you're actually mobile - ie moving around. If you're stationary, sitting at home in or in the office, all that cool cell-to-cell handover technology in the network has zero value to you. And, increasingly, there will be ways to avoid paying for it in those cases. At the moment, the IP-based options to play arbitrage games (like dual-mode phones) are still clunky, but they're evolving in various guises over the next few years. Other cellular-only options will also give lower-priced indoor phone calls. Voda itself has a "HomeZone" type service in Germany, offering low-cost calls ostensibly to substitute for fixed-line voice, but also to compete with O2's successful Genion product.

Bubley opines that the "more aggressive fixed/mobile hybrid operators will be the ones to benefit from new network architectures like IMS."