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2006 Global Mobile Communications - Voice still the Killer App


Attention: There is an updated edition available for this report.

Annual report covering: GSM, CDMA, 3G (analyses, technical issues, standards, market data), fixed-mobile substitution, Bluetooth, MVNO. Also contains industry analyses, issues and strategies, government policies, spectrum developments.

Detailed chapters on:

The future of voice
Technology information
Global overview and analysis
Trends and Developments
Marketing and Business Strategies
User statistics
Revenues, ARPU and forecasts


Mobile operations of telcos are progressively overtaking fixed line operations. This is largely due to fixed-line operators not having introduced significant new products, services or cost-saving technologies in the same way that mobile operators have. However, despite retaining their role as cash cows for incumbent operators, fixed and mobile voice services are progressively being overtaken by broadband. Increasingly, operators will need to take a holistic view of the market, necessitating a total review of their business models.

Mobile growth
While high growth rates have been maintained globally until the present time, there is a massive shift taking place away from growth in developed markets to growth in the new emerging markets such as India, China, Africa and Latin America. By 2005, global growth stood at around 20%. Based on 2 billion subscribers, this is a massive development, and growth could lead to 5 billion subscribers over the next 15 to 25 years.

As more participants enter the mobile market, competition is increasing, with a subsequent decrease in prices and increase in services offered. To maintain the high growth of the mobile market, and counter falling prices, mobile carriers have started to offer services previously the domain of the fixed operators, and the fixed operators have had to respond.

Mobile revenues
In developed markets, mobile call charges are falling by 15%-20% per annum. While several countries in this market still see high growth in new mobile subscribers, they also see their overall revenue flattening because of the drop in call charges, as well as the fact that new subscribers are, in general, low-usage customers. As would be expected, markets with strong competition have seen a considerable drop in mobile call charges in developed markets through significant price competition around capped price plans. The others have retained declining but relatively high ARPUs. Since 2002, the low priced countries in this market have seen a levelling out of the mobile charges as they approach fixed call charges. These countries are stimulating further growth by developing mobile value added services.

In the new emerging markets, services are available for as low as $5 a month and call charges as low as 1 cent or even less per minute, with handsets available for $30 and 2nd hand ones even lower. It is easy to understand why the emerging market is seeing a mobile explosion.

Prepaid mobile services have rapidly increased their share of the total mobile market and are virtually the only option in emerging markets.

The future of MVNO remains uncertain, they are providers of mobile services independently from the operator that is supplying the network. With more competition and new services, operators will have to consider better MVNO deals in order to grow the market.

3G
2G based services will remain predominantly voice driven, with a few enhanced services (SMS), and is unlikely to be widely accepted for data applications. For users who are only interested in voice, 2G is seen as quite adequate. For those who want mobile data services, 3G is, at least by the operators, seen as the answer, and some companies have paid enormous sums of money to obtain spectrum to allow them to capture this market. Having paid enormous prices for 3G spectrum, companies are now looking for business opportunities to recoup at least some of the money that they have invested.

Despite the high prices paid for 3G spectrum, and the initial enthusiasm by the operators, the future of 3G is not as bright as originally thought. Its major problem is its unsuitability for carrying mobile data, the major hope for its future. Wireless broadband technologies such as WiMAX, which are designed for mobile data, are going to compete head-on with 3G for that space. Only in Japan, where 3G has now been around for close to five years, are we seeing some good penetration - around 30%. Italy follows with just over 10% penetration, and the other country worth mentioning is the UK, which has just over 5% 3G penetration.

The most visible of all companies in the 3G market is Hutchison with its 3 service. It has launched these services in several countries with optimistic subscriber targets, but to date these have not been met. In its attempts to win subscribers, it has attacked the high end of the market, taking share from the existing 2G and 2½G operators. This is already leading to price retaliation by the existing operators and, if Hutchison’s efforts are successful, could lead to an all-out price war.

Infrastructure
Despite promising growth, CDMA use is well below the early expectations. The US was slow to switch from analogue to digital services. In Asia, growth is slow except for Korea, although China is starting to show interest. For a while during the late 1990s, there was growing international interest in the upgrade of Digital AMPS known in the US as TDMA. There have been developments in CDMA to help bridge the gap to 3G, including cdmaOne and the various forms of CDMA2000, and their relative merits compared with the GSM technologies are discussed.

By late 2005, GSM allowed 1.6 billion mobile users to roam to more than 200 countries via over 750 networks making and receiving calls on one handset and with one global number. The technology now accounts for more than 77% of the world’s digital mobile phones. This market share is expected to grow even more with 3G systems, as more than 85% are expected to be 3G GSM/WCDMA (UMTS).

A low power short range radio technology is Bluetooth, which combines hardware, software and interoperability capabilities into a global standard that eliminates wires and cables between both stationary and mobile devices, facilitating data and voice communications between devices such as mobile phones and PCs. An attempt to combine it with UWB to create a better platform failed in 2006 when the parties could not agree on standards.

Mobile spectrum
Before 1990, it was only possible to use the UHF band and below, thereby limiting the speed of information transfer. Since then, governments have released more of the high frequency spectra, thereby allowing major advances in technology and service.

The latest trend is to develop more innovative and flexible spectrum management plans which would open up competition and allow for a whole new range of applications and providers.

Mobile equipment
The value of the telecommunications equipment market overall has declined considerably. Because of revolutionary new technologies and lower consumer prices due to competition, some equipment suppliers had to severely reduce their production facilities and/or outsource production to countries with lower labour costs. The mobile market has also been affected, but to a lesser extent.

The simple mobile phone that only made telephone calls is now a museum piece. As vendors fight for market share, and more bandwidth becomes available, mobile phones are incorporating a variety of new functions such as still and movie cameras, advanced messaging, access to the Internet etc. Sales of handsets slowed markedly following the industry downturn in 2001, but started to recover in early 2004, with rapid growth during the year, aided by the development of new equipment such as camera phones. The trend here is that the mobile and wireless broadband market will be driven by new devices that will be pushed onto the market by the vendors. Mobile operators will see their leading position here to drive this market severely curtailed. Nokia retains it dominant market share, with Samsung showing the fastest growth rate. It is expected that the IT and CE industries are going to take a more prominent role in the market of new wireless broadband devices.

Mobile Satellite Services
Since 2001, the satellite industry showed little or no growth, and growth is not expected to return in the near future. Despite the original optimism and huge cash injections, MSS has not yet succeeded in establishing itself as a competitive market segment. Iridium went into bankruptcy pending restructure within a year of launching its service and Globalstar, another major international player, suffered the same fate. During the past few years, many of the surviving operations were acquired by Teledesic which, in turn, has been mothballed. In 2005, some signs of returning life emerged.

1. THE FUTURE OF VOICE (FIXED, MOBILE, VoIP)
1.1 Telephone companies - experts in negative marketing
1.1.1 Don’t use the phone
1.1.2 Don’t use the mobile phone
1.1.3 Don’t use the fixed phone
1.1.4 The IP solution
1.2 Fixed voice market
1.2.1 Market under pressure
1.2.2 Rearguard skirmishes in the voice market
1.2.3 A neglected market
1.2.4 Fixed-line SMS
1.3 Fixed-mobile convergence
1.4 Mobile voice
1.4.1 Only option in developing countries
1.4.2 Mobile forced to move into commodity territory
1.4.3 Mobile companies failed to jump the S-curve
1.4.4 Multimodal services
1.5 VoIP
1.6 Pricing strategies
1.6.1 Telecoms price developments
1.6.2 From bundling to triple play
1.6.3 New ways to measure ARPUs
2. MOBILE REVENUE AND SUBSCRIBER STATISTICS
2.1 Mobile revenue developments - 2005
2.2 Subscriber growth
2.2.1 Historical growth (1996-2003)
2.2.2 Slowing mobile subscriber growth (2002-2005)
2.2.3 Mobile statistics published in 2005
2.2.4 Mobile statistics published in 2004
2.2.5 Subscriber forecasts reports current and historical
2.2.6 Reports from 2004
2.3 Usage
2.4 Average revenue per user (ARPU)
2.4.1 Early ARPU developments
2.4.2 Stabilisation of ARPU
2.4.3 Third generation ARPU
2.4.4 Will 3G save mobile revenue?
2.4.5 ARPU statistics from 2005
2.5 Mobile call charges
2.6 Roaming - a $50 Billion market
3. MOBILE COMPETITION AND REGULATIONS
3.1 Mobile competition
3.1.1 Lack of mobile competition (analysis)
3.1.2 Key issue: termination rates
3.1.3 The effects of liberalisation and competition
3.1.4 Closed network pricing hampering mobile competition
3.2 Wireless VOIP coming to the rescue
3.3 Roaming
3.3.1 Global roaming - introduction
3.3.2 Users frustrated with mobile operators
3.3.3 No optimal routing from GSM MoU
3.3.4 Zebra
3.3.5 Interstandard roaming from Vodafone
3.4 Mobile number portability
3.4.1 Different flavours
3.4.2 Global overview
3.4.3 Key issues
3.4.4 Delaying tactics
3.4.5 Portability strategies
3.4.6 Technical issues
3.5 Mobile fraud
4. PREPAID AND MVNOS
4.1 Prepaid mobile services
4.1.1 Introduction
4.1.2 ARPU comparisons with post-paid
4.1.3 Subscriber statistics
4.1.4 Prepaid technologies
4.2 Mobile Virtual Network Operators (MVNOs)
4.2.1 Definitions
4.2.2 Marketing considerations
4.2.3 MVNO developments - an analysis
4.2.4 Multimodal services
4.2.5 Mobile Virtual Network Enablers (MVNEs)
5. FIXED MOBILE CONVERGENCE (FMC)
5.1 Incentives to converge
5.2 Substitution well and truly underway
5.3 Mobile consumer spending passing fixed-line
5.4 Fixed voice still cash cow
5.5 Pricing - key to success
5.6 Converging Networks
5.7 Next Generation Networks (NGN)
5.8 Converged fixed/mobile service in the UK
5.8.1 BT Mobile Home Plan
5.8.2 ‘Bluephone’ from BT
5.9 Fixed-Mobile Convergence Alliance (FMCA)
5.10 Mobile - the missing link
5.10.1 Mobile forced to move into commodity territory
5.10.2 Mobile companies failed to jump the S-curve
5.11 New business models for mobile
5.11.1 Restructuring overdue, but won’t happen soon
5.11.2 Choices have to be made
5.11.3 Vertical integration or permission based?
5.11.4 Customer profiling
6. THIRD GENERATION MOBILE (3G)
6.1 3G - An Analysis in 2006
6.1.1 The future of 3G
6.1.2 3G is dead - long live WiMAX
6.1.3 Is Super 3G WIMAX?
6.1.4 Slow start so far
6.1.5 Will 3G survive as a separate business model?
6.1.6 The time for 3G has arrived, but no cheering from the operators
6.2 Market issues for 3G
6.2.1 What is 3G?
6.2.2 The future of 3G
6.2.3 Mobile structural separation needed for survival
6.2.4 Possible 3G strategies
6.2.5 Shifting paradigms
6.2.6 Business realities
6.2.7 The essential role that 3G can play
6.2.8 Multiple terminal applications
6.3 3G - statistical overview
6.3.1 Definitions
6.3.2 Published 3G statistics
6.3.3 Never has so much been paid, by so many, for so little
7. MOBILE INFRASTRUCTURE
7.1 Overview
7.2 CDMA
7.2.1 CDMA losing the battle
7.2.2 History and overview
7.2.3 Statistical data
7.2.4 Market realities
7.2.5 CDMA SIM (smartcard)
7.2.6 CDMA will not challenge GSM
7.2.7 Technical
7.2.8 CDMA 450
7.2.9 cdmaOne
7.2.10 CDMA2000
7.2.11 CDMA2000 1xEVDO
7.2.12 TD-SCDMA
7.3 TDMA
7.4 GSM
7.4.1 History
7.4.2 Implementation of GSM
7.4.3 GSM Statistics
7.4.4 GSM developments
7.4.5 The GSM Association
7.4.6 GSM technology
7.5 Bluetooth and UWB
7.5.1 Introduction to Bluetooth
7.5.2 Bluetooth dating
7.5.3 Bluetooth security
7.5.4 Analysis of Bluetooth
7.5.5 Bluetooth market statistics
7.5.6 Bluetooth technology
7.5.7 UWB (UltraWideband)
7.5.8 Bluetooth-UWB merger
8. MOBILE SPECTRUM
8.1 Spectrum developments
8.2 Radio spectrum utilisation
8.3 Satellite spectrum
8.4 Technological developments
8.5 Market developments
8.6 Spectrum trading
8.6.1 The brave new world of spectrum trading in 2005
8.7 World Radiocommunication Conference 2003
8.7.1 WRC - International Forum
8.7.2 Wireless LANS get global allocation
8.7.3 IMT and beyond
8.7.4 Public protection and disaster relief
8.7.5 High altitude platforms stations
8.7.6 Aeronautical services
8.7.7 High Density applications for broadband
8.7.8 Earth Stations on board vessels approved
8.7.9 Morse Code - not gone yet
9. MOBILE EQUIPMENT MARKET
9.1 Market overview
9.1.1 Problems with the WIPI standard
9.1.2 BYO base stations
9.2 Wireless infrastructure statistics
9.2.1 Reports from 2004
9.3 Personal Digital Assistants (PDA)
9.3.1 PDA market set to move to mobile suppliers
9.3.2 Reports from 2005
9.3.3 Reports from 2004
9.4 Tablet PCS
9.4.1 Reports from 2004
9.5 Mobile handset market
9.5.1 Overview
9.5.2 Reports from 2006
9.5.3 Reports from 2005
9.5.4 Reports from 2004
9.6 SIM card developments
9.7 Multimode devices
9.8 Satellite phones
9.9 Safety and security issues
9.9.1 Exploding phones
9.9.2 Problems continue in 2004
9.9.3 Mobile phones targeted by viruses
9.10 Unsustainable handset subsidies
10. SATELLITE MOBILE SERVICES
10.1 Mobile satellite services
10.1.1 MSS in emergencies
10.2 Global satellite supply
10.3 Major MSS operations
10.3.1 Inmarsat
10.3.2 OmniTRACS (Qualcomm)
10.3.3 Mobile Satellite Ventures (MSV)
10.3.4 Orbcomm
10.3.5 Japanese - Korean mobile satellite - 2004
10.3.6 Asia Cellular Satellite
10.3.7 Thuraya
10.4 Overview of major LEO/MEO consortiums
10.4.1 Globalstar, out of the woods
10.4.2 ICO Global Communications
10.4.3 Iridium
10.5 Broadband-to-air
10.5.1 Connexion
10.5.2 Tenzing
10.5.3 Verizon Airfone
11. GLOSSARY OF ABBREVIATIONS
Exhibit 1 - Triple play pricing examples
Exhibit 2 - Overview of countries with numbering plans
Exhibit 3 - NP: key issues
Exhibit 4 - GSM Security Features
Exhibit 5 - Comparative characteristics of a MVNO
Exhibit 6 - European 3G systems installed - 2003 and 2004
Exhibit 7 - Overview of 3G activities around the globe
Exhibit 8 - TD-SCDMA Technology
Exhibit 9 - Frequency bands for GSM
Exhibit 10 - What is spectrum?
Exhibit 11 - Frequency bands and their usage
Exhibit 12 - International frequency assignment plan - 2110 - 2450MHz bands (excerpts)
Exhibit 13 - Interesting spectrum developments
Exhibit 14 - Mobile satellite services


Table 1 - Mobile subscribers by region - 1993 - 2005
Table 2 - Worldwide cellular population - 1993 - 2005
Table 3 - Top countries ranked by mobile penetration - 1998; 2001 - 2005
Table 4 - Top 20 mobile subscriber countries and annual growth per region - Q1 2005
Table 5 - Top 15 mobile operators worldwide by subscriber numbers - Q2, 2005
Table 6 - Prepaid and total mobile subscribers by operator - 2Q, 2005
Table 7 - Global forecasts for mobile - 2005 - 2010
Table 8 - World mobile subscriber base by geographic zone - 2003 - 2004 (historical)
Table 9 - Mobile subscriber distribution by region - 2000; 2004; 2008
Table 10 - Largest five mobile markets - 2003; 2009
Table 11 - Comparison mobile - fixed business usage - 1996 and 2005
Table 12 - APRU for major mobile operators worldwide - Q2, 2005
Table 13 - Average mobile ARPU by region and annual change - Q2, 2004 - 2005
Table 14 - Mobile ARPU for selected companies - Q2, 2004 - 2005
Table 15 - Mobile ARPU (Voice, Data and Combined) for selected companies - Q3, 2005
Table 16 - Mobile market share - 1992 - 2004
Table 17 - Top 15 mobile operators by prepaid users - Q3 2005
Table 18 - Fixed vs mobile telephony - 1991 - 2004
Table 19 - WCDMA subscribers by country - 2003 - 2004
Table 20 - 3G subscribers in Asia Pacific countries (excl Japan) - 2004; 2009
Table 21 - 3G worldwide subscribers by technology - 2003 - 2004 (historical
Table 22 - 3G spectrum licence cost per capita
Table 23 - World cellular subscribers by technology - March 2004
Table 24 - CDMA worldwide subscribers - 1997 - 2004
Table 25 - Growth of GSM market - 1994 - 2005
Table 26 - World cellular subscribers by technology - 2003; 2004; 2006
Table 27 - GSM networks on air - 2003 - 2004
Table 28 - Subscribers by GSM technology - March 2004
Table 29 - Worldwide PDA unit sales by vendor - 2003 - 2004
Table 30 - Worldwide PDA revenues by vendor - 2003 - 2004
Table 31 - Worldwide PDA sales by operating system - Q1, 2003 and Q1, 2004
Table 32 - Worldwide PDA sales by vendor - Q1, 2003 and Q1, 2004
Table 33 - Worldwide PDA sales by vendor - Q2, 2003 and Q2, 2004
Table 34 - Tablet PC sales in EMEA by vendor - Q2, 2003 and Q2, 2004
Table 35 - Mobile handset revenues worldwide - 2002 - 2006
Table 36 - Global mobile terminal revenues - 2003 - 2005
Table 37 - Mobile systems sales revenue - 2004 - 2007
Table 38 - Handset suppliers market shares - 1997 - 2004
Table 39 - Handset sales and market shares - first two quarters 2005
Table 40 - Worldwide mobile handset sales - 2001 - 2003; 2005; 2007
Table 41 - Worldwide mobile terminal sales by vendor - 2002 - 2003
Table 42 - Mobile handset market shares - March 2004
Table 43 - Global sales and market shares by vendor - Q2, Q3, 2004
Table 44 - Worldwide mobile device sales market share - Q1, 2004
Table 45 - Global handset sales and market shares by vendor - 2003, 2004
Table 46 - Mobile handset sales by vendor - Q2 and Q3, 2004
Table 47 - Mobile phone features desired by US users - June 2004

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