US Wireless Data Market: Mid Year Update statistics

US Wireless Data Market: Mid Year Update

By Chetan Sharma

• US wireless data market is growing at an impressive rate. Top 4 US carriers (Cingular, Verizon, Sprint Nextel, and T-Mobile) accounted for over $6.3B in wireless data revenues for the first half of 2006. Overall, wireless data service revenues exceeded $7B and the figures are likely to exceed $15B for the year 2006. This is almost a 75% jump from end-of-2005 number of $8.6B. The growth rate slowed down only slightly from 2004-2005 growth rate of 87%. SMS and data transport still drives bulk of data revenues but their percentage share is declining.

• Among the top 4 US carriers, Verizon has made the most impressive strides in the last 4 quarters, increasing their wireless data revenues by a whopping 114%. Next Sprint with 71%, T-Mobile with 65%, and Cingular with 54% also netted impressive gains.

• Verizon became the first US carrier to net over $1B in wireless data revenues in a quarter. Cingular was close second with $979M and Sprint with $935M are likely to cross the $1B mark next quarter.

• Sprint retains its leadership position of highest wireless data ARPU in terms of absolute dollar amount at $7.25 but lost its number one spot in the % data ARPU to Verizon which now leads the US carriers at almost 13%. Average data ARPU is now $6.3 or 12%.

• Overall ARPU (voice + data) increased slightly from Q106 but declined $0.27 from Q405. The general trend is towards slow decline. Data revenue is barely keeping up with the decline in voice ARPU. On an average voice ARPU has declined 8% from a year ago and data ARPU has increased 48%. Average Overall ARPU was $53.04. Sprint led with $62 followed by T-Mobile at $51, Verizon at $49.7, and Cingular with $48.4.

• If the current trends hold, Verizon Wireless is likely to surpass Cingular Wireless as number 1 US carrier by Q307.

• US had about 7M 3G subscribers by Q206, primarily from Verizon and Sprint Nextel. With Cingular joining the fray, the 3G growth is expected to accelerate with 2007 being the inflection year.

• US wireless subscriber penetration stands at approximately 74% and is likely to exceed 78% by the end of the year.

• Top 4 carriers added 12.7M subscribers from Jan-Jun 2006.

• The top 4 US carrier account for 79% of the subscribers, 86% of the service revenues, and approximately 95% of the wireless data revenues.

• US Off-net revenues for the year are likely to exceed $750M.

• Data ARPU of CDMA/EV-DO carriers was 20% higher than GSM/WCDMA carriers.

• Several high-profile MVNOs were also launched in the last few months and the overall results have been disappointing primarily due to poor execution, instant crowding effect, and competition from big 4.

• US wireless carriers are steadily climbing in their wireless data performance as compared to their peers worldwide. Verizon, Cingular, and Sprint ranked number 4, 5, and 6 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for first half of 2006.

• The #1 carrier worldwide in terms of total wireless data revenue for the first six months of 2006 is NTT DoCoMo which has maintained its position for a number of years. It is now generating almost $900M/month from wireless data revenues.

• The top 10 carriers in terms of total wireless data revenues for 1H06 in order of rank are NTT DoCoMo, China Mobile, KDDI, Verizon Wireless, Cingular Wireless, Sprint Nextel, O2 UK, Vodafone Japan, SK Telecom, and China Unicom. (6 Asian, 3 US, 1 Europe. Who says US is behind). Vodafone Germany, TMO Germany, and TMO US are also closing in.

• All the top 10 carriers in the list exceeded $1B in data revenues for the first six months of 2006. China Mobile and China Unicom benefited from their huge subscriber base of 274M and 135M respectively while DoCoMo and KDDI did well because they are generating over $17 (or 28%) in wireless data ARPU.

• The top 10 carriers accounted for almost $24B in wireless data revenues for the first six months of 2006. The top 10 carriers account for approximately 700M (or approx 28%) subscribers worldwide.

• In terms of wireless investments, over $2.8B was invested in wireless related companies/startups from Jan-Jun 2006 (this figure jumped to $4.1B in July). Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas. M&A activity also picked up quite significantly.

• WiMax industry got a big boost with almost $1B investment in Clearwire and due to Sprint Nextel’s announcement of WiMax deployment. Sigh of relief for Intel and Samsung. Puts pressure on Qualcomm. Maybe Intel will renegotiate with Clearwire.

• Worldwide Handset market share: Nokia and Motorola dominated with 35% and 23% market share respectively. Samsung with 12% stands third. Source: iSuppli. Though Apple’s iPhone rumors have been clouding the market, it is Motorola which continues to lead in launching must-have handsets. Windows mobile is starting to make serious inroads in the handset market but performance issues and high price points deter mass market adoption.

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Click to call: New revenue models from Mobile Search


This is the first post from Chetan Sharma

“What we find changes who we become” – Ambient Findability, Peter Morville

As the discoverable content increases in depth and breadth, it is inevitable that mobile search will drive user navigation on devices. Whether it is by user keying in a few keywords or short cuts or search engine generating a personalized, to-the-minute “always-active” user interface that directs user navigation, mobile search strategies will start taking center-stage for most consumers.

There are several differences between Internet (aka Google) search and mobile search. While Google on desktop might return a useless list of 2M hits (the useful results are generally in the first dozen links), mobile search needs to take in more variables before it figures out the “answer” to the user input. These variables are driven by context, history, preferences, and social network. You weir off a bit and the experience starts to waffle. Understanding “user’s intent” is key.

The business models are also different. While Google might present the paid-search-results on top, on the side or even blended in the main body, search results needs to very optimized and customized to the query and context. In addition, several new models come into play like “click-to-call” or “push-to-call” where real money is to be made. Click-to-call has a simple revenue model which most businesses understand. It is conceptually same as ‘referral fees’. Some calls such as in real-estate or mortgage business can yield over $30-40 per call for referrals. Some of the emergency services like plumbers, dentists, locksmiths have up to 50-60% conversion rates. You can do the math. The provider who has the best and most updated inventory has a big leg up in the race for mobile search domination. Local inventory plays a huge role, the hard part is to keep the numbers refreshed and encourage the ecosystem to participate and update the information while also getting involved in the advertising side of the business. Click-to-call already exists on Google on the Web. But on mobile devices, it takes on a much more useful and immediate dimension due to the nature of the medium.

Advertising also takes a new dimension with mobile. The wealth of user information and the capability to have 1-to-1 relationship with the user makes it a very powerful platform for the multi-billion dollar advertising industry. Advertisers design their campaigns based on the hard and real user demographic information and also get the confirmation of a “view” which is gold for advertisers. Having said that, a few missteps can also alienate users for months. Advertisements and/or promotions will also have the “click-to-call” functionality. Several travel agencies and big brands have already experimented with clickable ad campaigns. Earlier this year, Google filed the patent application for the same. Similar functionality could be built for audio content and other pieces of content types. Click-to-call will also become a very social and viral feature.

Click-to-call in combination with automated attendant is also very disruptive to the multi-billion directory-assistance (DA) and yellow page industry. If a smart analytical engine backs up the voice recognition system (could be tied to mobile search), majority of the consumer queries can be taken care of without reaching a live person thus deceasing the $1-$2 per call charge to the consumer.

Click-to-call can also be offered as a customer service-enhancing tool by the carrier or as an instant survey or feedback tool for different industries.

The majority of the searches initially will happen via browser and by using keypad input from the user but will gradually be integrated tightly across applications and platforms and will accept voice, image, bar code, and others input mechanisms. Mobile search will also renew the “dumb-pipe” debate, disrupt the value chain, and force players to form new alliances that weren’t conceivable before. New business models such as “click-to-call” will bring new sources of revenue to the wireless industry. In the end, mobile search will help drive quality of content and better user experience.

I welcome your thoughts on this model and others in relation to Mobile Search

Image source: SEO roundtable