Wireless reaches saturation in the US

There has been little or no real competition in the wireless space since the time when a brick phone was a status symbol among the rich and famous. That’s about to change. Sprint’s troubles are the tip of the iceberg for the wireless cartel. With a handset in nearly every pocket, belt loop and purse for persons over the age of 10, and new wireless access going live, the consumer may actually get a break this year.

2008 will mark the end of rapid mobile subscriber growth in the U.S. — and the beginning of a long decline. By 2012, total annual subscriber growth in the U.S. could fall to as low as 2 percent per year.

Saturation shouldn’t come as a surprise to anyone in the industry. The U.S. mobile market is finally approaching the level of market penetration (85 percent in 2007) reached in Europe years ago. But while the U.S. would do well to learn from Europe’s experience, there are also fundamental differences between the two that could make the transition in the U.S. smoother than it was across the Atlantic.

In the UK in 2002, for example, subscriber growth slowed from to 9 percent from 16 percent in 2001 (the year that penetration rates reached 85 percent), and since then has only exceeded 10 percent in one year (2004). In 2006, UK subscriber growth was just 4 percent. Meanwhile, ARPU fell by 24 percent between 2000 and 2001, a drop from which it has only recently started to show a slight recovery, thanks to the contribution of data services. (from GigaOm)

To stay in control of the game, the wireless cartel is going to increase their focus on long term contracts with more creative incentives to sign. The better informed will rebel and go elsewhere. There will be price wars. Market chaos is a beautiful thing.