Wireless Data a Revenue Boost for Carriers
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A new survey of wireless industry growth reports steady, and somewhat astounding, leaps in subscriber base, revenue, cell site locations and even industry employee levels, yet when it comes to wireless plan spend and talk minutes the increase has been much slower and incremental.
According to CTIA, a wireless association, data service revenues for the first half of this year hit $14.8 billion, representing a 40 percent jump compared with the first half of 2007 when revenues totaled $10.5 billion.
While users are making more calls, 1.12 trillion minutes were recorded in the first half of 2008, a jump of 10.9 percent compared with the first half of 2007.
In addition, the average wireless call has dropped from 3.13 minutes in mid-2007 to 2.43 minutes in June of this year. While there are more subscribers than ever -- 262 million this June representing a 20 million spike from June 2007 -- people are clearly not talking as much as they're using text applications and other datacentric services.
"These statistics prove that wireless service in todays marketplace means so much more to American consumers than just voice calls," Steve Largent, president and CEO, CTIA, stated in a press release. And that trend bodes well for carriers as wireless data spend is now 20 percent of all wireless service revenues.
That's welcome news to carriers intent on expanding mobile device functionality for market differentiation in an increasing competitive industry. It also validates the financial investments carriers are making for mobile device application development.
Earlier this year Research In Motion (NASDAQ: RIMM) launched the $150 million BlackBerry Partners Fund, and Apple's venture capital partner pledged a $100 million for iPhone development.
All the nonvoice application development is clearly paying off for carriers given revenue growth. Total wireless service revenue hit $72 billion in just the first six months of this year. Revenues for the full year of 2007 were $71 billion.
More and more people are using wireless devices to access the Internet, take photos, get directions, watch videos, download music and send text messages. But this is just the beginning," Largent stated, adding his group expects demand to continue as carriers and handset makers "continue to respond, evolve, innovate, and deliver" to meet user demands.
While making more calls, users are also texting more than ever. The study reports 75 billion messages in June 2008, an average of 2.5 billion a day. That's a 160 percent spike over the 28.8 billion in June 2007. Subscribers are enamored with multimedia capabilities as well given that 5.6 billion MMS messages were delivered in the first half of this year -- nearly as many reported for all of 2007.
The statistics support research that claims text is a current must-have for users. According to Amplitude Research's July report text messaging is first, followed by camera capability and e-mail access.
The CTIA survey compares industry statistics from 1985, when there were just 203,600 subscribers accessing 599 U.S. cell sites and no one was tracking call length or minutes. While advanced services, such as texting, are spurring adoption some mobile device aspects aren't changing as fast.
For example, the average local call length in 1988 was 2.25 minutes. At the time the monthly average bill was close to $100. Today the monthly plan is nearly half the price, averaging $48.54, yet the call length is just 2.43 minutes.