Global Overview - Mobile
By Kylie Wansink - Senior Research Analyst Global Markets

While it still too early to claim a turnaround, it is clear that the mobile industry is undergoing profound changes. The saturated developed markets are forcing the industry to find new revenue streams and we are now seeing other organisations such as media companies, content providers, Internet media companies and private equity companies becoming involved in this market.

The emerging markets are also making their mark on the mobile sector; many of the less mature regions around the world are showing significant growth and operators around the world are certainly taking note. The worldwide mobile subscriber base is still growing and this can be attributed heavily to the growth in these markets, with many regions such as Asia Pacific having room for more growth ahead. In 2008 there are now more than 3 billion mobile subscribers worldwide and some of the more mature markets have over 100% penetration.

Mobile ARPU levels differ widely between the regions of the world; however, on the whole all regions have experienced declines in ARPU over the past few years. While the emerging markets are a growth area for mobile services, the ARPU from these markets is low compared with the developed markets. In 2008 overall mobile ARPU levels are expected to decline by at least another 4%. ARPU from mobile voice services has been particularly affected by cuts to tariff rates and the trend towards voice-data substitution. While voice still makes up the majority of mobile traffic, mobile data now contributes around 10% of global mobile ARPU.

Operators still struggle to acquire satisfactory ARPU from prepaid mobiles, despite its popularity. Prepaid mobiles now account for more than 60% of the worldwide mobile subscriber base and continue to grow by around 60% per annum. The prepaid model has taken off around most of the world with many countries seeing an ongoing high level of growth. The emerging markets in particular favour prepaid mobile phones, with some markets having over 80% penetration of prepaid compared with the contract segment.

With more competitors entering the market, mobile communications is rapidly becoming a commodity. Companies that will be able to develop interesting new business models on top of the mobile infrastructure will be much better positioned to entice the end-users. Despite evidence that some MVNOs around the world are struggling, in our opinion MVNOs can still play an important role in the telco industry as long as the business models are changed. MVNOs that are able to focus on customer service and branding will be in a prime position to develop these new business models.

With everyone vying for new revenue streams, network operators are looking to attract customers from outside the established wireless market. Given the right regulatory and pricing conditions, mobile operators can compete directly with carriers by offering fixed services over their wireless networks. Neither fixed nor mobile operators can afford to develop their services in isolation any longer; unified services benefit all sides of the industry. Fixed mobile convergence has become a major goal of operators, but it also stands in opposition to a related trend, and goal, of mobile operators: fixed-to-mobile substitution. While the total number of fixed phone lines in the world is still increasing slowly, wireless is growing much more quickly. In Finland in particular, 90% of all voice calls are expected to originate from a mobile phone in 2008; interestingly the Finnish market also has some of the cheapest mobile call charges in the world. Mobile phone usage is also attributed to the increase in overall voice traffic in Western Europe.

In 2008 GSM technologies account for around 85% of the world's digital mobile phones, the equivalent of over 2.6 billion users. This market share is expected to grow even more due to increasing mobile penetration in the developing markets. With GSM being the leader in terms of 2G, the focus of the CDMA camp has turned to 3G which includes the technologies that bridge the gap to 3G (CDMA 2000) and its 3G successor CDMA2000 1x EV-DO. However, WCDMA technologies currently account for the majority of all 3G subscriptions worldwide.

Short range wireless technology has revolutionised the personal connectivity market by providing freedom from wired connections. The installed base of Bluetooth devices has passed the 1 billion mark and there is some evidence that growth is beginning to slow. Despite this, it continues to be widely adopted throughout the telecommunications, IT and home entertainment industries, as well as such diverse areas as automotive and health care, reaching almost all sectors of the economy. UWB however has the potential to be faster than Bluetooth and despite the absence of a global standard, manufacturers, including Dell have started to ship the first UWB-enabled laptop computers.

Table 1 - Mobile subscribers by region - 1993 - 2007

Year	North America	Western Europe	Eastern Europe1	Asia Pacific	Latin America	Other2	Middle East1	Africa	World Total
	Subscribers (million)
1993	17.3	8.9	0.1	6.6	1.2	0.3	-	-	34
1994	26.0	14.5	0.3	10.6	2.4	0.6	-	-	54
1995	36.1	22.4	0.7	22.5	4.0	1.6	-	-	87
1996	46.9	36.0	1.5	46.2	6.7	2.9	-	-	140
1997	57.8	57.0	3.9	74.2	12.5	5.3	-	-	211
1998	74.3	92.3	7.6	105	21.6	10.6	-	-	308
1999	92.9	155	13.5	152	38.0	20.4	-	-	470
2000	116	235	27.0	234	63.3	49.3	-	-	734
2001	138	283	50.0	330	86.3	63.2	-	-	950
2002	151	303	74.4	434	101	69.1	-	-	1,133
2003	168	332	100	529	123	101	-	-	1,355
2004	180	365	190	645	175	120	-	-	1,675
2005	208	394	250	849	239	-	94	113	2,147
2006	247	428	384	1060	308	-	77	223	2,727
2007 (e)	270	478	437	1140	357	-	95	267	3,044

(Source: BuddeComm based on industry data)

Notes:
1 From 2006 onwards, Turkey is included in Eastern Europe. In 2005 Turkey was included in the Middle East but from 2006 onwards it is not. If Turkey is also excluded from the Middle East in 2005 then subscribers would total 54 million.
2 From 2005 onwards, the 'Other' column was separated to report figures for Africa and the Middle East.

For more information see -
2008 Global Mobile - Data and Content Markets
2008 Global Mobile Communications - Statistics, Trends & Forecasts

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