Vodafone was back in the spotlight as City analysts raised fears that wireless internet access – known as Wi-Fi – poses a significant threat to its business model.  

Although shifting data traffic to Wi-Fi is a lifeline for mobile operators, Karen Egan and Chris Alliot – Royal Bank of Scotland's new telecoms team – kicked off the year by arguing it also exposes the industry to a low-cost alternative, new entrants and cannibalization.
“Demand for Wi-Fi-only devices, such as the iPod Touch Wi-Fi, is growing fast and rapidly becoming an alternative to mobile data subscription,” said the RBS analysts.   They added it is even more concerning that an estimated 50 percent of mobile calls made within a Wi-Fi spot are vulnerable to substitution via phone calls over the internet, also known as VoIP.
“New entrants can also combine the cheaper Wi-Fi platform with MVNO (Mobile Virtual Network Operator) agreements to undercut the mobile operators,” said the analysts.
In interviews with industry players, the RBS telecoms team found this progression “will be faster than the market believes”. As a result, RBS slapped an “underweight” rating on the whole sector, with a strong preference for “fixed” over “mobile” operators.
(Source: Daily Telegraph)