Monday, January 16, 2006

Informa Telecoms and Media: What does 2006 hold for Western European mobile markets?

Dario Talmesio at Informa Telecoms and Media pens his predictions for the Western European mobile market in 2006. According to Informa, "total subscriptions for the region passed the 400-million milestone in early 2005, but are not predicted to reach the next 100-million mark until 2010."

Western European markets have reached maturity and Talmesio believes it "is unlikely that penetration of unique users will increase substantially from the current 70-80% registered in most countries." But as Talmesio points out, network operators, manufacturers and others are still trying to tackle specific markets and demographics. Talmesio writes:

MVNOs will have a significant role to play in increasing subscription numbers and have already established their presence in France thanks to the enforcement of new rules by the industry regulator during 2005. The trend will continue in 2006 and MVNOs will make their first appearance in southern Europe, with Italy and Spain representing the most interesting opportunities. Tele2 will aim to enter the mobile space in new markets and will be followed by smaller niche players, as well as major content providers from the broadcasting and entertainment world that will be looking to build partnerships with mobile operators for the distribution of digital content. ISPs will also continue searching for mobile access technology solutions, as mobile operators are still reluctant to grant them capacity; ISPs are expected to enter the mobile space more assertively in the course of 2006. Second- and third-tier operators such as Germany's E-Plus will increasingly focus their efforts on developing their wholesale businesses to try to increase their market presence. In this regard, Telfort in the Netherlands set the precedent. Meanwhile, MVNOs have reached maturity in the Nordics and experienced consolidation in 2005. Customer segmentation will be the new focus in these markets, where there is virtually no scope left for discounting voice tariffs.
Talmesio assesses the acceleration of migration to W-CDMA in Western European markets in 2006. W-CDMA accounted for 3.68% of total subscriptions at the end of September 2005, having reached 15.8 million. By the end of 2006, Informa forecasts that W-CDMA subscriptions will increase to around 10.89% of total subscriptions in the region." He believes:
the principal drivers of migration to W-CDMA will be continued aggressive bundling of voice minutes with W-CDMA devices, the increasing attractiveness of W-CDMA handsets (the average weight of W-CDMA handsets in Europe has dropped from over 150g at the end of 2003 to around 125g now, with some sub-100g handsets available), as well as a general decline in the ex-factory cost of handsets for operators, which will significantly narrow the 2G/3G handset price differential. As prices decline further in 2006, so operators will be able to offer 3G handsets at prices that should drive mass-market adoption. 2006 will also herald the arrival of HSDPA in Western Europe, with T-Mobile Germany likely to be the first to launch high-speed data via HSDPA-enabled PC datacards in March 2006. Informa anticipates that the first HSDPA handsets (e.g. Samsung's ZX20) will begin shipping before the end of H1 2006, although it is not expected that a wide choice of handsets supporting HSDPA will become commercially available before the end of 2006.
On the top of mobile multimedia services, Talmesio concludes:
Thanks to the improved multimedia capability of handsets in circulation coupled with the growing market penetration of such handsets, mobile operators will increasingly offer music and television content to mobile users. Television content providers and mobile operators will increasingly work in close proximity and mergers and acquisitions will materialise in this context during 2006. H3G is the pioneer in this space having acquired a broadcasting channel, Canale 7 TV, in Italy at the end of 2005. The transition to multimedia will be led by the operators that pioneered 3G and want to keep a strong degree of control over content in order to capitalise on their existing strong customer relationships, rather than letting content companies move in on these. Vodafone is the best placed in this regard.