October 7, 2011 | In: Opinion, Technology

Will Phone Companies Still Be Relevant 10 Years from Now?

We use the phone every day, we use it for our business, we use it to call our family, we use it complain about something, etc… It’s hard to see phone companies disappear, after all, we have used the phone for over a century now, and we will probably use it for the next century, albeit differently… So, why am I questioning their relevancy 10 years from now? As you can see from the title, I’m not questioning the relevancy of phones, but that of phone companies, and there’s a huge difference. But don’t phones need phone companies to operate, you may say? They do, at least for the moment, but slowly and surely phones are becoming independent of phone companies. Let me explain!

20 years ago when we only had fixed lines, we had to get that fixed line from a phone company and then call someone who also has another fixed line which he bought from the same or another company. Afterwards, mobile phones came into play, and we were able to buy mobile phones to call other people on their fixed lines or their mobile phones. After that, and because of the Internet, the concept evolved, and, for a small monthly fee, we were able to make phone calls from our PC to a fixed line or a mobile phone. Still, we did need a phone company because at the terminating end there was an actual phone running a service from a phone company or a mobile carrier, so phone companies were still indispensable for connecting two or more people together by phone.

Fast forward to now, my friend told me about several applications that allow you to make calls between smartphones running different operating systems (such as an Android calling an iPhone) by simply taking advantage of your Internet connection. Here’s how the process work:

– You install the application on your smartphone
– You choose a username (or a nickname)
– Your friend installs the same application
– You will be able to make calls for free whenever you are both connected to the Internet

As you can see from the above, the phone company/mobile carrier doesn’t need to provide its services for the call to happen, in other words, they are completely useless/irrelevant in these types of calls. However, we know that when you’re on the road, there’s no Internet connection (well, at least for now), so you still need the phone company to make a call. But think about it, what will happen when Internet connection is available everywhere, all the time? Is this a far fetched dream (judging by the current technological advancements, I don’t think so)? And if this dream materializes, and it most likely will, what will happen to phone companies? Will they still exist? Will they still be able to rob people by offering useless services as they do now?

In fact, I see that phone companies will, from now, receive less and less revenue for their services! That’s why they are all running (not walking) to diversify their products, they want to offer something new, they want to offer Internet services as well. But whatever they do, if it’s not big, their revenue will decline, and that’s why I recommend avoiding stocks such as Sprint and Verizon, for their future is not that bright, and in 10 years now, who knows if they’ll still exist or not? Oh and by the way, Sprint is losing money while Verizon is trading at a P/E of 16 (which means that it needs 16 years of current revenue to payback investors).

Who knew, the future will be phones without phone companies!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

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