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Mobile Subscribers Yearwise comparision

International experience so far

November 16, 2010
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With the completion of the 3G and broadband wireless access (BWA) spectrum auctions, the sector is gearing up to replicate the success of mobile telephony in broadband. The potential of BWA technologies is evident from the fact that the auctions fetched the government over seven times the reserve price per block. tele.net recently organised a conference, “BWA in India”, to provide a platform to discuss the potential and challenges associated with these services. The following section on International Experience So Far brings forward the views of Sivarama Krishnan, Executive Director, PricewaterhouseCoopers….

Globally, mobile internet access has witnessed significant uptake. In 2008, of the total 288 million mobile subscribers, 3.4 per cent were accessing the internet on their mobile phones. According to PricewaterhouseCoopers (PwC) estimates, this percentage will increase to 29.8 per cent by 2013.

According to PwC’s projections for the Europe, Middle East and African markets, the subscriber base is expected to touch 2,045 million by 2013, of which 23.9 per cent would use wireless internet services. For the Asia-Pacific region, the mobile subscriber projections stand at 3,137 million, of which 20.4 per cent are expected to access the internet through their mobile phones. Revenue-wise, the global mobile internet market is estimated to grow to $111 billion by 2013.

With constant technological innovations and the arrival of smartphones, data usage on the mobile platform has increased significantly. Today, mobile data technologies are beginning to offer performances that rival those by fixed line technologies. The gap between bandwidth usage on a fixed access platform and on mobile is declining rapidly. High speed packet access currently offers a speed of 100 Mbps on mobile phones, and this is set to increase to 1 Gbps with the coming of long term evolution (4G) technology.

The smartphone is beginning to rival the personal computer (PC) as a communication tool. The iPhone is a case in point. It is comparable to a desktop PC of 2001. A speed of 600 MHz and memory of 256 MB, which was offered by an Apple iMac G3/600 in 2001, was made available in an Apple i-Phone 3GS in mid-2009. Google’s Nexus One handset offers an even better performance with a 1 GHz processor.

The digital content on these smartphones will expectedly drive the growth in entertainment and media between now and 2013, and according to PwC’s estimates, access to the internet is set to grow at a compound annual growth rate of 9.2 per cent during the same period.

Increasingly, smartphones are being used by consumers to view digital content such as music, games and the internet, and this is unlikely to be restricted to only developed markets. On an average, significant differences have been noticed in the usage patterns of a normal mobile phone user and that of a smartphone user. While voice constitutes 70 per cent of the daily usage of an average cellphone user, it accounts for about 40 per cent for a smartphone user, over 50 per cent of whose usage consists of data services such as e-mail, internet browsing, mobile gaming and music.

Clearly, digital content is beginning to replace voice in the usage of smartphones. Advancements in smartphones have led to consumers spending more time using them at the expense of other devices like games consoles and PCs. Low-cost smartphones are now being launched in markets that have low handset subsidies and income, thereby doing away with some of the primary issues associated with the iPhone. The success of mobile banking in Africa illustrates that the mobile phone can be the dominant force behind internet growth in emerging markets.

Going forward, 3G is an important growth driver for operators. Therefore, it is important to secure spectrum for offering new services. Across Europe, 3G has favoured mobile operators rather than broadcasters as there is an opportunity for such operators to achieve significant network cost savings by acquiring new spectrum. The US spectrum auction for 700 MHz (TV) bandwidth in 2008 saw Verizon and AT&T together securing 70 per cent of spectrum.

The Federal Communications Commission of the US has announced that it intends to make 500 MHz of spectrum available for broadband usage within the next 10 years. Of this, 300 MHz would be made available for mobile use within five years’ time. Apart from this, it will assist spectrum repurposing and infrastructure-sharing arrangements.

Another aspect that needs to be addressed by operators is the pricing of data services, given the data usage patterns that have been observed worldwide. Mobile operators initially offered extensive data usage to their customers with “all you can eat” data plans. This, however, resulted in a huge spike in traffic growth on their networks while the average revenue per user of data customers kept sliding. These data plans failed primarily because mobile operators had underestimated the smartphone user’s appetite for data. “About 3 per cent of the smartphone users are consuming 40 per cent of all the network traffic,” the CEO of AT&T Mobility had stated. Japanese operators, realising the huge appetite for data usage, shifted away from “all you can eat” plans and witnessed an 11 per cent year-on-year growth in data revenues in 2008.

Given the patterns of data usage on cellphones, advertising is expected to form a major portion of a mobile operator’s revenue share in the future. Social networking sites, which are being extensively accessed by subscribers through handsets, may drive the growth of advertising via mobile phones. Mobile transaction is yet another opportunity that has huge potential. Also, applications, search options and content have demonstrable profitability. The sales of mobile phone applications rose to $6.2 billion in 2010, and are forecasted to increase to $29 billion by 2013. However, the revenue potential of mobile applications is uncertain as piracy exists even in controlled app stores. Therefore, though there are tremendous opportunities for operators, they still have a long way to go before capitalising on them.

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