DBRS Commentary: The Wireless Sector: From Revolution to Evolution and Back Again

According to a DBRS commentary published today, the wireless sector is once again facing change, adapting to a fundamental shift in the way social media is used in a mobile world and forever seeking the ideal balance between advances in technology and the inevitable lag in government regulation, particularly in terms of attaining additional spectrum for new services. For the wireless sector as a whole, no significant rating changes are expected in the near term. However, Canada’s wireless market should continue to be driven by a relatively stable competitive framework in which the incumbent carriers focus on the data-centric smartphone segment while the new entrants, which have added to the competitive landscape over the past year or so, battle for the price-sensitive pre-paid mass market.

“Today, the sector is at a point where the key components of the wireless ecosystem – networks, handsets and applications – are all rapidly innovating in support of each other,” says Chris Diceman, Senior Vice President. “The largest threat faced by most of the developed world’s carriers is not what the industry was facing ten years ago – that is, the inefficiencies caused by an unsynchronized ecosystem – but rather the need for spectrum to build these networks to meet the booming demand for mobile broadband.”

The commentary also examines the phenomenon of mobile social media, the implications of its popularity for wireless sector participants, and the impact of the demand for data on company balance sheets. “In Canada, wireless voice services have become highly commoditized, given the maturity of the market and recent new competition therein,” adds Mr. Diceman. “However, mobile data has been a meaningful growth driver that has supported Canadian average revenue per user (ARPU) growth.”

A copy of this commentary is available by contacting us at info@dbrs.com.