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EU Economic Downturn May Impact Mobile Industry

By Susan J. Campbell, TMCnet Contributing Editor

The buzz surrounding the potential for a stronger U.S. economic recovery in 2012 is the impending downslide in Europe. The aftermath is expected to have a rippling effect, reversing trends of improvement in the U.S.

The continued advancement in communication technology however appears as one bright spot on the horizon - as the demand for mobile VoIP could offer new opportunities.

A recent Yankee Group (News - Alert) report offers additional details, highlighting that several European Union countries are expected to slide into a recession in 2012. Governments in the impacted countries are expected to make difficult decisions to stay afloat. Those most affected include Italy, Greece, Portugal, Spain, Ireland and others. France and the U.K. are also expected to feel the impact at a lesser degree.

Throughout the affected countries, leaders expect increased unemployment rates and shrinking consumer confidence. The mobile VoIP industry is expected to feel a portion of that pain as consumers tighten their usage behaviors to minimize monthly spending. At the same time, mobile VoIP offers a more economic approach to communications, which could draw more users.

Europeans affected in the downturn are also expected to search for mobile services that offer better values, such as mobile VoIP, which will lead to the increased selection of MVNOs or value-oriented operators.

Mobile subscriber churn increased in the last recession that took hold at the end of 2008. Similar switching behavior and the demand for mobile VoIP capabilities is sure to drive increased churn rates.

The Yankee Group report, 2012 Mobility Predictions: A Year of Living Dangerously, shares specific predictions in the mobile VoIP space, suggesting the net effect will result in an increase of 0.1 percentage points in the average monthly churn rates in Western Europe throughout 2012. Total customer churn could easily increase from roughly 2.3 percent per month today to 2.4 percent before the end of 2012. Translated into subscriber numbers and nearly 7 million additional customers in Western Europe will switch mobile providers in 2012.

“Unfortunately, this uptick in subscriber churn will happen despite operators’ ongoing efforts to migrate customers to postpaid services and long-term contracts linked to new smartphone purchases,” said Declan Lonergan, research vice president at Yankee Group. “In this scenario, we see MVNOs and value-oriented operators such as Virgin Mobile, Lebara Mobile and Yoigo as winners, while traditional incumbents like Telecom Italia, Telefónica and Deutsche Telekom (News - Alert) are slated to lose out.”

Mobile VoIP providers such as REVE Systems offer a powerful alternative for operators seeking to protect the customer base in times of economic turmoil. The company’s iTel Mobile Dialer Express mobile application enables the use of VoIP with any mobile phone and allows for full operator branding. With this option in place, operators can take a proactive approach to protecting the customer base in the face of a changing economy.

 

Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Stefania Viscusi