Research Notes

The Mobile Operators may have to revise their hopes for non-voice revenue

As the penetration of mobile phones in Europe starts to reach the maximum in many European countries, the mobile operators already know today what kind of revenues can be expected from voice traffic in the years to come.
Indeed, the only unknown factor they have, is whether the cost pr. minute of voice traffic will continue to fall, as it has done in recent years, due to tough competition in the market place. If that trend continues, the operators can expect even less revenue from voice traffic!

So many mobile operators today are looking at projected figures for revenue from non-voice traffic. That is person to person SMS and premium priced SMS services today – and MMS, Java and WAP based services in the future.

All in all, some operators have already expressed hopes that non-voice services is what will save the day and repay the huge investments in UMTS technology and licenses. So how much are the operators expecting that non-voice will bring in? Some European operators have already quoted that they hope that up to 50% of their total revenue will actually derive from non-voice traffic in 5 years time.

But according to Strand Consult’s latest report that has just been published – “How to make money on mobile services” a picture of the current & future Market for Mobile Services in Europe – the mobile operators are setting their hopes to high – even before all the prerequisites for a healthy and large mobile services market are actually in place.

The information and figures in “How to make money on mobile services” a picture of the current & future Market for Mobile Services in Europe have been compiled from actual traffic figures from many mobile operators and content- and service providers in Europe and shows that mobile services will only contribute with 1 – 2% of the operators ARPU (average revenue pr. user) in 2002 – while P2P services (person to person SMS’s etc.) will account for 12%!

Based on Strand Consult’s actual data collected in 2002, the report predicts that mobile services will not actually overtake ARPU from P2P messages until 2005, when the ARPU from mobile services will be 17% – just beating the 16% that P2P messages will grow to.

In other words, in 2005 non-voice ARPU will total 33% and half of that will still be coming from P2P messaging. The mobile operators have the opportunity to influence this figure tremendously and both ways. For a start, there are still many challenges and obstacles that are explained in detail in “How to make money on mobile services” a picture of the current & future Market for

Mobile Services in Europe that must be solved before operators can even hope of achieving the abovementioned 17% ARPU, on the other hand, the 17% could be even bigger if the operators move very fast and coordinated with the rest of the mobile sector – including the content owners, service creators and terminal manufactures – during the second half of 2002, as the report from Strand Consult does take into account the caution that the mobile operators have so far shown in defining and implementing a strategy for their 2.5G and 3G rollout.
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