Mobile Data Will Reach 22% of Total Mobile Service Revenue by 2016

Mobile broadband is the biggest single revenue opportunity in Africa in the immediate and longer term, according to the results of a recent Industry Outlook survey commissioned by Informa Telecoms &Media. By way of contrast, data service revenues represent about 43 percent of service provider revenue in the North American markets.

Informa forecasts that annual mobile data revenues in Africa will reach $18.5 billion by 2016. In 2011 mobile data represented 12 percent of service provider revenue. 

Legacy Regulation a Barrier to Network Modernization?

Nothing is more normal in the communications business than contestants lobbying for regulations that support their own business interests, whatever the "public policy" implications might be. Equally normal is the "lag" between regulatory frameworks that represent a technology neutral approach to getting citizens and consumers the "best" services at the lowest possible price.

It might be tempting to blame regulators for being "behind the curve," but that isn't quite fair. Regulators work in a highly political environment where substantial political pressures have to be accommodated. Many competitive communications providers simply acknowledge that larger enterprises in the communications business have more employees, hence voters, hence influence.

Likewise, small rural telcos have incumbency in their favor: they are the established providers of "last resort" communications services in isolated or rural communities, and regulators are loathe to upset them. None of that has prevented upstart competitors, including satellite, fixed wireless and even "dominant" mobile service providers from making the argument that the best way to provide advanced services in rural areas is to support efficient providers that can deliver services the fastest, at the lowest cost. 

But there always are political issues. Economic issues are a factor as well. Though the Federal Communications Commission has in past years given subsidies to mobile and fixed network providers, few argue that such disbursements, supporting two or more providers in an area, make as much sense as choosing one provider and targeting resources.

State regulators increasingly agree, and are regularly granting wireless providers status as carriers of last resort, meaning mobile service providers are eligible for subsidies that in past years have gone exclusively to landline telcos. 

Beyond that, competing providers are governed by industry-unique rules. Satellite, cable TV, competitive local exchange carriers and fixed wireless providers, for example, operate under distinct regulatory frameworks, though providing the same services. 

In a world without politics, that might not happen. But we do not live in a world without politics. And for that reason, virtually all competitors will complain, from time to time, that the rules are unfair. They are. 

Mobile Data Now 43% of Total U.S. Mobile Revenue

The U.S. mobile data market grew three percent quarter over quarter and 17 percent year over year to reach $19.9 billion worth of revenue in the third quarter of 2012, according to mobile analyst Chetan Sharma. 

That’s the good news: mobile data continues to drive revenue growth as messaging and voice revenue matures.

Data is now almost 43 percent of U.S. mobile industry service revenue. But the possibly troubling implication is that the industry is about half way to saturating the mobile data market.

If you want to know why mobile service providers are launching mobile payments, mobile wallet, mobile banking or mobile commerce initiatives, or machine-to-machine services, that is the reason. Another wave of revenue growth, big enough to displace voice, messaging and even mobile broadband, is necessary.

Most western markets have seen messaging revenue decline, though up to this point the U.S. market has resisted the trend. But in the third quarter, for the first time, there was a decline in both the total number of messages sent and received, as well as total messaging revenue.

Voice traffic will dip below 10 percent of the overall traffic in 2012 (revenue is another matter).

For much of the last three decades, voice has dominated the revenue streams for almost all operators, Sharma argues.


In 2013, global voice revenues will fall below 60 percent. So far, the drop in voice revenues has been matched by the rise of messaging revenues and mobile data. But mobile data also will reach saturation at some point, raising the question of what comes next.

The answer to that question is not yet clear. But most observers believe some combination of new applications, using network resources as an input, must be a large part of the answer.

Technology Shifts Can Take 10 to 20 Years

Being late to get into a market can be dangerous, but being too early might be the more prevalent mistake.

Though the tablet might be the fastest-growing consumer appliance of all time, most devices and appliances take quite a long time to reach ubiquity. Consider smart phones, which many rightly consider to be among the faster-growing devices of all time.

BellSouth launched the IBM Simon, with its rudimentary touch screen, in 1993. It didn’t catch on. About 2002, personal digital assistants started to have the ability to make and receive phone calls. RIM shipped its first BlackBerry about that time.

In late 2006 only 715,000 smart phones were sold, though, representing just six percent of U.S. mobile phone sales. Up to that point, the smart phone was spreading not much faster than personal computers had done, according to Technology Review.

Still, keep in mind that It took landline telephones about 45 years to get from five percent to 50 percent penetration among U.S. households, and mobile phones took around seven years to reach a similar proportion of consumers. Smart phones have gone from five percent to 40 percent in about four years.

But it likewise took about 11 years for use of mobile phones to reach 10 percent penetration, so it took about 18 years for use of mobile phones to reach about half of people in the United States.

Since it took about eight years for smart phone penetration to reach 10 percent of people, and then another seven years to reach half of users, it took about 13 years for smart phones to reach half of U.S. consumers. And that has been about the fastest adoption rate of any appliance, in the U.S. market.

Global adoption of mobile phones in the developing world has been stunningly rapid, as well.

In 1982, there were 4.6 billion people in the world, and not a single mobile-phone subscriber.

Today, there are seven billion people in the world and six billion mobile cellular-phone subscriptions. In other words, the world has gone to about 86 percent penetration in about 30 years.

From the standpoint of human progress, that is fast. From the standpoint of any single company, that is a long time. And that is worth keeping in mind. Most truly important consumer technologies take time to reach ubiquity. Would-be market leaders have plenty of time to misjudge market progress, and fail before “ubiquity” is reached.

U.S. LTE Arms Race Heats Up

U.S. mobile service providers are in the midst of a major “arms race” aimed at getting new Long Term Evolution fourth generation networks up and running, as customer adoption shows strong growth.

Verizon Wireless, the market leader, says it will complete its national network by mid-2013.

AT&T recently reiterated a timetable that some might call accelerated. T-Mobile USA likewise has stepped up its own efforts to build a nationwide LTE network. And Sprint likewise has purchased significant new assets in the U.S. midwest to support its planned LTE network.

LTE is not a commercial reality many other places in the world, in 2012, though, TeleGeography says.

Oddly Enough, Some Think Apple's Relationship With Consumers is "Not" Sticky

Most people likely think Apple has a very sticky relationship with its customers. 

But Alec Ellison, chairman of technology investment banking at Jefferies & Company, thinks Apple is more vulnerable to changing consumer tastes than Amazon, Facebook or Google.

Ellison says that although Jeffries is “bullish” on all four companies, Apple has the least “stickiness” with consumers. What he means is that Apple has to continue rolling out hot new products if it wants to keep its lead. It would be much harder for a competitor to unseat Amazon, Facebook, or Google, even if they don’t offer any new innovations.

U.K. 4G Auctions Might Cost Order of Magnitude Less than 3G

The U.K.’s 3G auction raised £22.5 billion ($35.7 billion) in 2000, amounts that nearly bankrupted most of the firms that won the bids. 

Long Term Evolution 4G auctions are expected to cost a lot less, despite more spectrum being auctioned in 2013 in the United Kingdom, at least in part because Ofcom has set relatively low minimum purchase prices. But carrier reluctance to overpay again also is key. 

The minimum reserve prices for the 4G auction suggest the licenses will cost far less than was the case for 3G spectrum, which has been called a winner's curse. 

Professional services firm PwC expects the auction to raise between £2 billion and £4 billion, TechCrunch reports.