On April 3, 1973 history was made when a senior engineer at Motorola, Martin Cooper, called a rival telecommunications company and informed them he was speaking to them on a mobile phone. It took 34 years for the first iPhone to arrive and transform the way we use our phones.
As the technology has improved, both in terms of devices and the networks (in some places) our usage patterns continue to change. Are the providers keeping up with this in terms of the packages they offer? And are they under threat if they do not?
A number of recent reports have reflected the changes in the way we use our mobile phones. For example, a report by Deloitte in late 2016 reported that 31% of smartphone users make no traditional voice calls in a given week - a significant change from 2012 when only 4% made no traditional calls. This is in contrast to the growth of consumer apps such as Facetime and Whatsapp, which reflected growing interest in video calls, and a desire to avoid roaming charges.
In the business sector the growth of VoIP and phone system apps allowing people to have their office landline number on their mobile has seen traffic move away from the mobile networks.
There has been a long-standing battle over whether it is better to have a mobile or landline number if you want to choose just one number to promote. It would seem that the landline is winning.
For example, in the financial sector with advent of MIFID II legislation and the need to record all calls, being able to add an app that can record calls in a compliant fashion and store them alongside calls made when in the office has meant companies are looking at data only sims in their company mobiles. In other words, pushing calls away from mobile and towards landlines. For other small business owners, the benefit of having a work number they can turn off at weekends and being able to keep their mobile number private is also a factor - and is helping to keep the landline alive.
It is hard to believe that the first text was sent in December 1992, when British engineer Neil Papworth used his computer to send a Christmas message to a mobile phone. The new language of text speak was born from OMG (Oh My God) to XOXO (hugs and kisses) and the much used LOL (Laugh Out Loud). The use of texts peaked in the UK in 2011 and since then it has fallen by almost half as instant messaging applications have taken over.
Who would have predicted that in 2016 WhatsApp would have more than a billion active users? (https://www.statista.com/statistics/260819/number-of-monthly-active-whatsapp-users/. Research (http://www.mirror.co.uk/tech/48-billion-fewer-text-messages-7621692) found that 42% of British people's main reason for using a mobile phone was to access messaging apps. Younger age groups favour apps such as Snapchat as they see SMS as old and unfashionable.
The implication for the mobile networks is that of lost revenue, as SMS was always a key part of their income stream. So, with SMS declining, the loss of roaming charges in the EU, and potential that, as we negotiate trade deals elsewhere in the world post-Brexit, other regions may also drop roaming charges - the mobile networks could see their profits dropping and their future looking a little less rosy than it has been.
For example, O2 announced its results earlier this year, and although revenues in 2016 grew 1.2 per cent year-on-year, the rise was due to higher subscription revenues and out of bundle charges for both contract and prepay customers. In other words, rising prices and charging people for excess usage including roaming. This will now be harder to do, and it will affect their revenues.
So, is the hope for the future of the mobile networks a growth in data usage as a result of the Internet of Things and increasing use of data-based apps? Whilst there are people with high usage due to video and music streaming, the average usage per device is still quite low. Research by Cisco showed that average monthly smartphone data traffic in the UK during 2015 was 1.2 GB - an increase from the average of 849MB per month in 2014. Even if that rate of growth was replicated again in the last 12 months, it still makes the average less than 2GB.
Although there are over 50 million 4G connections in the UK - the lack of coverage (the UK ranks 54th in the world) means that the applications and technologies that would drive data usage, struggle to work all the time. That is where 5G, whenever we finally get it, may help the networks as it is likely to prompt a surge in data usage. However, the networks face a new challenge in the growth of wifi hotspots - consumers now expect that almost every coffee shop and bar offers free wifi. It is also becoming the norm on many train and coach services. Smart users who consistently connect to wifi wherever available can, on average, reduce data usage by a third.
With a need to fund investment, for example, in the next generation 5G networks, this creates a challenge for the mobile operators. The UK's mobile and data telecoms plans are already five years behind countries such as South Korea and Japan. If users continue to communicate via apps (both messaging and voice) and using wifi wherever it is available, this will inevitably lead to the prices of standard packages increasin to generate the revenues the operators need. Either that or the UK Government is going to have to put more funding into the infrastructure - something that Governments in many other countries are already doing.
