WiFi hotspots will cost $12 bln in missed revenues to US cellular companies

Increased deployment and aggressive pricing of WiFi capabilities from operators such as SBC, AT&T, and MCI, as well as the increased provisioning of free WiFi hotspots will place as much as $12 bln of projected profits at US wireless operators at risk, according to Strategy Analytics. The key impacts on US wireless operators will include a reduction in projected wireless data ARPU (average revenue per user) from $3.40 to $3.20 in 2005, and from $10 projected in 2008 to $7.20; an effective reduction in the average projected cost in the US to transmit1 MB of data from nearly $12 previously projected for 2005 to about $6, and for 2008, a reduction from about $4 down to $1.50; a reduction in US wireless industry EBITDA (Earnings before Interest, Tax, Depreciation, and Amortization) as a percentage of revenue from 30.5% in 2005 to 30% and in 2008, from about 30.5% down to 26.5%.