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Mobile Data Services to add $318B in 2010 -- over 50% from Asia

August 21, 2003

Europe may have started the interest in mobile multimedia services with the 3G auctions, and the US may have first advertised "mobile Internet," but it's Asia Pacific that will lead the world in adoption of multimedia enhanced "Advanced Mobile Data" services with $19B in annual revenue and a 40% share of the world market by 2005,according to a just released report by Telecompetition.

Japan, China and India Lead

The report shows the Asia Pacific region will add over 600M new mobile data subscribers through 2010 -- adding $142M annually by the end of the decade. Over 80% of that revenue will be from advanced mobile data services delivered on 3G or 2.5 G networks.

By 2007, two of the top three countries are in the Asia Pacific Region. In first place is China, where mobile data subscribers are expected to quadruple to 256M subscribers, making it the single largest market for both mobile voice and mobile data. The United States will then be the second largest market with 211M mobile data subscribers. Japan is third, with 102M mobile data subscribers. India will be the tenth largest single market with 38M subscribers, but at only 3% mobile data penetration. Unlike some of the other top markets for mobile data subscribers, India and China will have substantial subscriber growth opportunity available through the end of the decade.

Will Mobile Data Relieve the Sortfall?

The report demonstrates the necessity of developing mobile data services to sustain operator revenue. Telecompetition predicts that by 2010, total worldwide average monthly voice revenue per user (ARPU) will drop from $26 to $18. To compensate for this decline and grow ARPU a modest 3% annually, mobile data ARPU must increase from around $2 today to over $12 by 2010, an increase of 36%, $10 of which will come from advanced mobile data services.

The report provides forecasts for two broad segments of mobile data services. The "other mobile data" segment consists of lower priced, less complex messaging services with little or no multimedia content. The "advanced mobile data" segment will consist of higher speed services, incorporating multimedia elements such as video and photo attachments or video conferencing. Telecompetition foresees a portfolio of individual services incrementally added as subscribers gain more experience with using mobile data applications. Over time, most subscribers will migrate to the more advanced services and will steadily increase the quantity and usage of services.

Mobile data will become an increasingly important part of the mobile service portfolio. In just three years, in North America and Europe, mobile data is predicted to contribute 18-25% of all mobile service revenue. Even in less developed countries including Latin America, mobile data revenue will comprise about 20% of all mobile revenue by 2010.

Asia Pacific Takes the Lead in Voice as Well

Just two years ago, the 26 industrialized countries considered the "developed world" dominated the global mobile market with a 60% share. The rapid growth of mobile services in China, India, and Eastern European countries such as Hungary has changed those dynamics. Through 2010, developing and emerging economies will add $2.5B in cumulative mobile revenue -- 52% of the worldwide total and over 80% of all new mobile voice subscribers.

China, which has surpassed the US as the single largest market, added mobile subscribers at a rate of 4-6M per month over the last two years. By 2005, the number of Chinese mobile subscribers is expected to exceed the entire population size of the United States. Growth in India is equally dramatic, with a five-fold increase in mobile voice subscribers raising India from the 15th largest mobile market to third place by 2007.

"Developing and emerging economies have been highly motivated to build mobile infrastructure as quickly as possible," states Telecompetition President and CEO Eileen Healy. "Inadequate communications infrastructure has become widely recognized as the major inhibitor to success in most world markets, including emerging economies."

Western Europe Mature and US Not Far Behind

The mobile voice market in many countries in Western Europe and developed countries in Asia Pacific is all but saturated, with many countries now exceeding 90% penetration levels and growth levels at 5% or less. Typically only a small percentage of people do not own at least one mobile phone.

The US, ending 2002 at 50% penetration rate, is predicted to exceed growth rates of most Western European countries. Voice subscribers are expected to grow at 10% annually through 2005. However, beyond 2005, with fewer and few people left without mobile phones, US operators will feel the same competitive pressure.

Optimism for Industry

Overall, the industry should be optimistic about its future, suggests Telecompetition. On average, the industry can expect a 10% compound annual revenue growth through 2010. Users are more familiar with the services and many of the technical issues have been resolved. Mobile data services have been slow to take off in Western Europe, but GPRS subscriptions have now exceeded the 1% penetration level and higher growth is expected in the future. Camera phones and photo messaging services have seen some success. New applications for even simple voice services, such as "push to talk" services are also finding new markets. As long as consumer and business users continue to find value in mobile communications and are willing to explore new services, the mobile industry will continue to grow.

 


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