Service providers are forecast to lower prices further over the next three years; however, strongly growing demand will limit price decreases
Los Angeles, CA (PRWEB) January 31, 2015
The cellular telephone services market has a buyer power score of 4.4, indicating a high degree of negotiating power for buyers. Buyers benefit significantly from falling price trends and low market risk. However, buyer power is slightly limited by high market share concentration.
“Because this service has a low level of specialization, there is intense price-based competition in spite of high market share concentration. Additionally, prices have fallen to an eight-year low in 2014 despite higher demand,” according to IBISWorld business research analyst Deonta Smith. Providers have gained substantial economies of scale through acquisitions of smaller companies. As such, providers have been able to lower their variable operating costs, allowing them to offer cellular telephone services at lower prices. Furthermore, providers are expected to increase infrastructure investments over the three years to 2017, which will help lower their costs further and enable them to continue reducing service prices in the next three years.
Buyers also benefit from low market risk. Most providers are very large public companies that offer a wide variety of telecommunication services. With an improving economy and higher corporate profit, demand for their services is steady. As such, bankruptcy risks are very low for these companies. “Supply chain risks are also low because the materials and goods required to provide cellular telephone services are widely available. With low supply chain risks, buyers can expect steady access to cellular telephone services,” Smith says.
However, buyer power is hampered by high market share concentration. The top four players in the market, Verizon, AT&T, Sprint Nextel and T-Mobile (owned by Deutsche Telekom), own more than 90.0% of the market in terms of revenue. With such high market share concentration, buyers, especially larger companies, have little choice but to turn to these companies for services. Nevertheless, this level of concentration also helps standardize services. When one provider lowers their prices or offers new services, other providers are quick to follow. For more information, visit IBISWorld’s Cellular Telephone Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of cellular telephone services. Offered through large and small-sized wireless telecommunication firms, cellular telephone services is the process of providing direct communication through radio-based cellular networks. Services include: cellular mobile phone services, paging services and wireless internet access. This report does not include smartphone retail or wireline telephone services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.