AT&T, Verizon Wireless Earn 68% of all U.S. Mobile Data Revenue

The U.S. mobile data market grew six percent quarter over quarter and 21 percent year over year to reach $18.7 billion in the first quarter of 2012, Chetan Sharma reports. 

Data now generates more than 40 percent of the U.S. mobile industry service revenue, and virtually all observers expect that percentage to keep growing.

In 2012, Sharma expects mobile data revenues in the U.S. market will reach $80 billion. 

Verizon Wireless and AT&T between them have two thirds of all U.S. mobile subscribers and earn 68 percent of all mobile data services revenue. 

Us wireless market_q1_2012_update_may_2012_chetan_sharma_consulting

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App Stores Turn 4

App stores will turn four in July 2012. Four years ago, mobile apps sparked a vigorous debate about whether "apps" or "Web" were the "best" ways for people to interact with content and experiences on mobile devices and PCs. 


One hears less of that debate these days, in part because users have found uses for both Web and app approaches to content and experiences. And those behaviors are extensive. 


In a next iteration, apps will become hybrid, integrating more naturally with Web approaches, though, says Thomas Husson, Forrester Research analyst. 


A third of European online consumers ages 18 who own a smart phone are using apps daily or more often, Forrester Research says.


Some 17 percent are using apps several times a day. Among European online consumers ages 18 with installed apps on their smart phones, 57 percent use social networking and 48 percent use news apps at least daily, while 69 percent use finance and banking apps at least weekly.

Google Chrome is the World's Number-One Browser

According to figures from online research company StatsCounter, Google’s Chrome overtook Internet Explorer as the world's most widely used browser, at least on desktops. In the mobile browser arena, Chrome and Opera are neck and neck.


You might say browser use is a simple matter of end user preference. But huge advertising and placement revenues are driven by browsers and selection of some browsers as the "default" on mobile devices and PCs. 

Grocers Go Mobile for Loyalty

Mobile devices and apps have lots of value for retailers beyond the use of mobile payment capabilities that replace use of cash, debit or credit cards.


Starbucks might be the best example of a retailer whose mobile payment app is as much about loyalty as it is expediting payments. 


In fact, services such as Google Wallet and Isis think the big value lies in a variety of loyalty and marketing services such payment apps can provide.


Many grocers in the United States are not waiting for such mobile wallet efforts to get established, and are launching their own mobile apps, designed to provide value for customers while they are shopping. The important observation is that there are many ways to use mobile devices in a retail setting aside from the actual payment process, which seems to get most of the attention. 


Neither "showrooming" or "payments" are the problems the grocer apps are trying to solve. Rather, the grocer apps aim to improve the shopping experience in other ways, frequently by enabling mobile shopping lists and applying all relevant coupons and offers, based on a particular shopper's past buying history.


In a way, those efforts aim to personalize the shopping experience by building on past buying behavior and rewarding repeat shopping with special offers that often are customized for each shopper, based on that history.


At least in some part, the branded mobile apps are an attempt to fend off use of third-party shopping lists, and in part an effort to provide more "stickiness" for repeat customers. 


Grocery store chain Safeway is beefing up its mobile strategy with a new shopping application, available for both Android and iOS devices,  that allows users to build shopping lists and then delivers coupons and other offers to a customer’s loyalty card that are applied automatically at check out. 


The "Just for U" app offers "personalized pricing" on items Safeway believes a particular shopper wants, based on buying history, and all special pricing is applied automatically when the shopper checks out, using the loyalty card. 





 Safeway isn't the only grocery chain to start using such apps. Harris Teeter's "ht mobile" app, available for Android and iOS devices, provides automated prescription ordering and refills, a mobile shopping list, barcode scanning, a favorite items feature, automated delivery of coupons,  an item search function and driving directions to the nearest location. 

The Harris Teeter app is similar in many ways to the SuperValu mobile app that can be used at Albertsons, Cub Foods and Shop 'n Save. 

In fact, SUPERVALU's retail technology group provides information technology solutions to other retailers, ranging from electronic payment services to scheduling, shrink-prevention services, computing and mobile infrastructure, gift card programs and other consulting services.

Bandwidth to Grow 15 Times, Operating Expense 2 Times, Next 5 Years

The good news for mobile service providers is that consumer spending on mobile broadband is growing fast. The bad news is that bandwidth demands that threaten to outrun revenue while boosting capital spending and operating expense as well.

In Germany, Solon expects a 15-fold increase in data demand over the next five years. The additional network capacity required would almost double network operating expense from 12 per cent of revenues in 2011 to 23 per cent of revenues in 2016.

In terms of remedies, a move to Long Term Evolution fourth generation networks will help, as LTE is more spectrally efficient by seven to 12 times. Also, new spectrum allocations for LTE are incremental to existing 3G spectrum allocations, so LTE will add net spectrum.

But that will take some time. Analysts at Solon assume that by 2016, not more than 25 to 35 percent of the total Western European data traffic will be handled by 4G networks.

Handling of video streams also might be important. More than half of all video sessions are abandoned before the viewer reaches midpoint, Solon says.

That means “downloading” complete videos is wasteful, if half of all those videos are terminated about half way through.

In some cases, service providers might be able to changing video resolution and compression ratios, or lower the bit-rate of a video, at least when those actions can be taken without damaging user experience.

And though some object, traffic shaping can be used in ways that change user behavior or otherwise match revenue to data consumption while lessening network congestion. Usage caps, time-based tariffs, or rate-limiting after a certain download volume is reached are some basic tools for “steering user behavior” and managing traffic loads at peak usage periods.

Solon also estimates that only about 30 percent of today’s mobile usage actually takes place at locations without access to fixed-line services. So Wi-Fi offload can help, as well.

Is 11% North American Telecom Revenue Growth Possible?

Insight Research predicts that global telecommunications services revenue will grow from $2.1 trillion in 2012 to $2.7 trillion in 2017 at a combined average growth rate of 5.3 percent. For most people, that will seem reasonable, given the growth of wireless services globally.

Wireless subscriber growth, particularly in Asia and other emerging markets, will raise wireless revenues by 64 percent from current levels, while wireline revenues show only modest growth. And what growth occurs in the fixed network realm will happen in broadband services.

Wireless 3G and 4G broadband services are projected to grow at a compounded rate of 24 percent over the forecast period and wireline broadband services projected to grow at a 13 percent compounded rate over the same forecast horizon, the Insight Research predicts.  

The most-surprising prediction, by far, is the forecast that, between 2011 and 2016, North American carrier revenue will  rise from $287 billion to $662 billion, representing 11 percent compound annual revenue growth.


Granted, there is lots of activity in the U.S. and Canadian markets around mobile payments, mobile banking, advertising, commerce and machine-to-machine services. But not many think those initiatives will produce lots of revenue within the next five years. 


So if an 11-percent compound revenue growth rate were to occur, it would have to be driven by the basic services people already buy.
That rapid growth, on a compound basis, would lead to a doubling of industry revenue in five years. Unlike the global forecast, that will raise some eyebrows.

For starters, since U.S. firms represent about 90 percent of North American revenue, that forecast has to be based on U.S. revenue growth. And since just a few U.S. firms control about 80 percent of all revenue, that forecast also assumes a few firms, necessarily including AT&T and Verizon Wireless, will find huge new markets, fast.

That isn’t to discount what Sprint, T-Mobile USA, Comcast, Tme Warner Cable and others might be able to do. It’s just that a doubling of revenue in such a short time would require extraordinary growth, likely requiring an assumption that every North American customer will double the amount they are spending on communications services over the next five years.

That is not “impossible,” but would be extraordinarily rare. Consider that revenue growth in Europe, a similar market in many respects, might grow at far-lower rates of perhaps four percent annually.

Most rational observers would probably agree that North American growth rates of four percent a year for the next five years would be reasonable.

Likewise, global carrier revenue is expected to achieve a nine percent compound annual growth rate  from 2011 to 2016, growing to a total of $5.13 trillion, Insight Research says.

In terms of segment revenue, the latest forecast projects a 45 percent CAGR for global wireless broadband revenue, 14 percent for fixed-line broadband, about six percent growth for narrowband wireless services and negative three percent revenue change for fixed network narrowband services.

One way to look at the structure of the global market is to note that, by 2016, wireless broadband will account for about 28 percent of all communications service revenue. Narrowband wireless services will account for 38 percent of global revenue. Altogether, wireless will represent 66 percent of total industry revenue.

Fixed-line broadband will account for 11 percent of global revenue, while fixed-line narrowband services will represent 23 percent of total revenue. In aggregate, fixed line revenue will account for 34 percent of total service provider revenue, on a global basis.

For some of us, the big surprise is the aggressive forecast for North American growth.

Business Spending on Telecommunications Has Shifted to Wireless

U.S. businesses will spend $154 billion for telecommunications services in 2012, growing to $184 billion by the close of 2016, representing a compound annual growth rate (CAGR) of 4.8 percent over the forecast period,  according to Insight Research.


Significantly, business spending for cellular and other wireless services is creating all of the business revenue growth, the firm says.

While U.S. business spending for wireline services is essentially flat over the five year forecast horizon, wireless expenditures are expected to grow at a compounded rate of 9.4 percent from 2011 to 2016, Insight Research forecasts.

Four vertical industries, including wholesale trade; financial, insurance, and real estate services; professional business services; and communications, accounted for 68 percent of total business telecom expenditures in 2011.


Of course, one might also note that consumer spending is shifting to wireless as well.


Insight Research also predicts that global telecommunications services revenue will grow from $2.1 trillion in 2012 to $2.7 trillion in 2017 at a combined average growth rate of 5.3 percent.


Wireless subscriber growth, particularly in Asia and other emerging markets, will raise wireless revenues by 64 percent from current levels, while wireline revenues show only modest growth.


Nearly all of the growth in both sectors is expected to occur in broadband services, with wireless 3G and 4G broadband services projected to grow at a compounded rate of 24 percent over the forecast period and wireline broadband services projected to grow at a 13 percent compounded rate over the same forecast horizon, the company predicts.