Wednesday, April 05, 2006

Telephia: Mobile Data Usage Adoption Hits 50 Percent Mark, With Text Messaging Consumption Leading the Way

Telephia has issued another report in conjunction with CTIA that finds "mobile data usage, such as text and multimedia messaging, mobile Web, and downloads, has reached the 50 percent adoption mark in Q4 2005, rising seven percentage points since the beginning of the year." According to Telephia, "SMS activity leads the way for all mobile data usage, with 41 percent of wireless subscribers using text messaging on their cell phones at the end of 2005. Twenty-two percent of all cell phone users paid for accessing the Web via their wireless device during the last quarter of 2005, while MMS activity posted a penetration rate of 13 percent, rising five percentage points since Q1 2005. In addition, 11 percent of wireless consumers downloaded content from their cell phones, gaining three percentage points since the beginning of the year."

Tamara Gaffney at Telephia said, "The overall growth in cell phone data usage is a boon for carriers. The popularity of mobile activities such as text-messaging is a solid revenue driver, with bundled pricing for data packages averaging $20 a month or 10 cents per message on pay-as-you go plans, in addition to the costs consumers already pay for their voice minutes."

Table 1: Cell Phone Data Charges -- Penetration Rates (U.S.)

Penetration Rate (%)
Q1 2005 Q2 2005 Q3 2005 Q4 2005
-------------------- ---------- ---------- ---------- ---------
Data Charge 43% 45% 47% 50%
SMS Charge 34% 36% 40% 41%
Web/WAP Charge 18% 19% 19% 22%
MMS Charge 8% 9% 11% 13%
Downloads Charge 8% 10% 10% 11%
-------------------- ---------- ---------- ---------- ---------
Source: Telephia Customer Value Metrics, Q1-Q4 2005

Consumers Prefer Monthly Data Package Pricing for Web/WAP and MMS

The study also found that "consumers who accessed the Web via their cell phones were twice as likely to subscribe to monthly data packages than pay-per-transaction, with Web/WAP package charges posting a 14 percent penetration rate, while individual transactional charges showed an eight percent rate in Q4 2005. MMS users were nearly three times as likely to subscribe to data packages as pay-per-transaction. In contrast, the penetration rate for subscribers to monthly SMS data packages was just about equal to the penetration rate of wireless consumers who paid for SMS per transaction, hovering around the 20-21 percent rate at the end of the year."

Gaffney added, "Consumers don't want to be surprised by additional costs to their cell phone bills and the perception is that Web/WAP and MMS are too expensive without using monthly data packages."

Table 2: Penetration Rates for Package Pricing vs. Pay-As-You-Go
Transactions (U.S.)

Penetration Rate (%)
Total Data Charge Q1 2005 Q2 2005 Q3 2005 Q4 2005
-------------------------------- -------- --------- --------- --------
Web/WAP Package Charge(1) 12% 12% 13% 14%
Web/WAP Transactional Charge(1) 6% 7% 6% 8%
-------------------------------- -------- --------- --------- --------
MMS Package Charge 6% 7% 8% 10%
MMS Transactional Charge 2% 3% 3% 3%
-------------------------------- -------- --------- --------- --------
SMS Package Charge 17% 17% 19% 20%
Transactional Charge 17% 19% 20% 21%
-------------------------------- -------- --------- --------- --------
Source: Telephia Customer Value Metrics, Q1-Q4 2005

(1) Note: A package charge is based on fixed monthly fees for a set
amount of data usage (including unlimited plans), while a
transactional charge is based on pay-as you-go or per activity