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Media rich services to drive mobile market
Monday, June 26 2006
by John Cradden


European Mobile phone penetration is close to saturation
point and future growth is reliant on media rich services
according to analysts.







The Western European Mobile Market: Trends and Forecasts
study, published by Analysys, predicts yearly revenue growth
of 6 percent until 2011. By 2011, the report authors estimate
the mobile industry will be worth EUR198.4 billion, compared
to EUR138.4 billion for 2005. Data services such as music and
mobile TV will drive this growth.







Active mobile penetration in Western Europe was 96.2 percent
at the end of 2005 and is forecast to grow to 108.8 percent
by 2011, driven by operators' efforts to penetrate
under-served customer segments (such as older demographics),
as well as by increased ownership of multiple SIM cards and
more machine-to-machine communications.





According to the report, 3G penetration stood at 6 percent at
the end of 2005 (22.4 million subscribers) but this is
expected to grow to 15 percent in 2006, and 29 percent in
2007. These figures include 3G broadband usage known as HSDPA
(High-Speed Download Packet Access) technology.







The Analysys report also speculates that Average Revenue per
User (ARPU) levels have now bottomed out and will continue to
recover, rising by 20 percent from EUR31.30 per month in 2005
to EUR37.50 per month in 2011.





"Although voice ARPU has been adversely affected by falling
termination rates and aggressive pricing strategies, this
trend is forecast to reverse from 2007 as 3G adoption
increases," said analyst Dr Windsor Holden.

"Operators are beginning to take advantage of 3G's greater
capacity to offer lower-cost bundles, thereby accelerating
fixed-mobile substitution."





"We are now seeing a rapid acceleration in the number of
full-track downloads and in streamed TV usage," said Holden.
"Subscribers are becoming more familiar and comfortable
accessing both on and off-portal content, [and] as mobile
broadband becomes more prevalent this growth is likely to
continue."





Holden added that the longer term prospects for voice
revenues were also encouraging.





The report concludes that fixed-mobile convergence has
emerged as a key strategic challenge for mobile operators.
"While it is likely to further encourage fixed-mobile
substitution, fixed operators' moves towards converged
technologies will also result in greater competition within
the mobile market," explained Holden.