Thursday, August 11, 2005

Global Mobile Market Predictions

It must be that time of year as three research firms recently released predictions for the global mobile market. Most were in the same ballpark, give or take a couple hundred million people.

Informa Telecoms and Media predicts the global mobile market is expected to add more than 1 billion subscribers and reach almost 3 billion overall or 43 percent penetration by the year 2010. While Asia, the Middle East and Africa will experience the highest growth rates, Informa reports "several countries are already reporting penetration rates of over 100% and Western Europe's regional penetration is set to breach 100% in a couple of years."

Mark Newman, Informa Telecoms & Media's Chief Research Officer, said "While the industry has tended to underestimate subscriber levels, it has been over-optimistic on ARPU levels." Informa predicts that "enhanced services over 2.5G and 3G networks will lead to an increase in data ARPU and revenues from data services areforecast to increase by 83% between 2005 and 2010. However, this increase will not be enough to counteract the effect of falling voice revenues as the growth in the overall market declines and negative growth is forecast for total revenues in 2009 and 2010."

Strategy Analytics also offered their thoughts on the potential global mobile market, predicting the "worldwide cellular user base will increase from 1.7 billion at the end of 2005 to 2.5 billion by the end of 2010, a 38 percent penetration rate."

Like Informa, Strategy Analytics "expects further weakness in global ARPUs as increasingly prepaid-centric and low-ARPU China, India and other emerging markets remain the engine for user growth."

Phil Kendall at Strategy Analytics, commented, "Voice usage will increase from 5.6 trillion minutes in 2005 to 12.6 trillion in 2010. GSM-based systems will continue to dominate the cellular landscape, accounting for 81 percent of subscribers and 76 percent of service revenues in 2010, though CDMA's more rapid evolution to 3G will see it dominate 3G subscriber volumes in the medium term. "

David Kerr at Strategy Analytics added, "3G subscribers will pass 50 million at the end of 2005. More importantly, European 3G markets are now outpacing Japan. The outlook for 3G is healthy provided that operators and their handset partners can expand beyond postpaid only users into the larger, but more price elastic, prepaid user segments."

Juniper Research estimates were in between those of Informa and Strategy Analytics. They estimate the "total mobile subscriber market will reach 2.7 billion by 2010 and that shipments of handsets will break the 1 billion mark by 2009 on the back of emerging Asia Pacific markets and increasing replacement rates in mature markets. 3G subscribers are predicted to grow from 30 million in 2004 to over 300 million by 2010."

Trevor Howell at Juniper said, "Most consumers are turned off by hi-tech acronyms, brand battles or technology for technology’s sake. They want useful services tailored to their needs that can be accessed at the push of a button, at a price they can afford, and on a tariff structure they can understand, and they want someone to set it all up for them before they switch on. Whoever gets this right will reap the benefits of increased ARPU."

To paraphrase Field of Dreams, if the carriers and handset manufacturers can make everything easier to use, then ARPU will come...