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Global Wireless Data
Market Update - 1H 2007 |
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http://www.chetansharma.com/globalmarketupdate1H07.htm
As you read this first half (1H) 2007 Global Wireless Data Market update
this week, somewhere in China, the 500 millionth subscription is being
signed up for services. In India, the 200 millionth subscription mark
was crossed in the last two weeks. In the US, the 250 millionth
subscription will be reached by end of the year. In total, these three
top mobile markets account for 32% of the total number of global
subscriptions.
2007 continued to enhance mobile data’s role in the operator ecosystem.
From the true and tested SMS messaging to new services such as Mobile
TV, Enterprise apps, and others, different services helped in adding billions to the
revenues generated for the first half of 2007. Japan and Korea remain
the envy of the global markets and the countries to study and learn
from. The US market has been steadily making strong comeback and equaled
Japan in terms of most service revenue generated from mobile data.
Chetan Sharma Consulting conducted its semiannual study on the global
mobile data industry. We studied wireless data trends in over 40 major
countries - from developed and mature markets such as Japan, Korea, UK,
and Italy to high-growth markets such as China, India, Brazil, and
Russia. This note summarizes the findings from the research.
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The worldwide markets continue to grow at an explosive pace reaching
3B subscriptions by Q207 up 13% from 2006 levels. Significant growth
is coming from India and China with both countries registering close
to 7M net adds on average in Q2. India recorded 8M net adds (its
highest) in July. Overall, the world market is at almost 50%
penetration.
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US equaled Japan as the most valuable mobile data market (in terms
of service revenue) with both nations reaching just over $11B in
mobile data service revenues for the first half of 2007. China with
$5.9B was ranked number three.
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NTT DoCoMo continues to dominate the wireless data service revenues
rankings with over $5.5B in service data revenues however Q/Q growth
has dropped to single digits. DoCoMo crossed 70% in 3G penetration
and is expected to cross 80% within 9 months.
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DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T,
Sprint Nextel, Softbank, O2 UK, SK Telecom, and China Unicom to
round up the top 10 operators by wireless data service revenues. All
the top 10 carriers exceeded $1B in data revenues for the first six
months of 2007.
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Most of the major operators around the world have double digit
percentage contribution to their overall ARPU from data services.
Operators like KDDI, DoCoMo, 3 Italy, 3 UK, and O2 UK are topping
30%.
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SingTel reported the highest increase in data ARPU from 4Q06 with
39% growth. Other notable percentage increases in ARPU were from
Rogers, AT&T, Verizon Wireless, and T-Mobile Austria. The biggest
drop in percentage terms were registered by the Indian operators.
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In terms of absolute dollar amount, 3 UK became the first operator
(qualifying limit: 4 million subs) to crack the $30 data ARPU mark.
By comparison, rest of the top 4 operators are below $18. In fact, 3
UK reported the highest ARPU recorded at approximately $94. Other
operators who reported overall ARPU above $60 were SingTel, Rogers,
Sprint Nextel, and 3 Sweden.
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The biggest jump in data revenues was experienced by Softbank,
Japan. Since taking over from Vodafone, it has turned the operations
around and has experienced a 42% jump in data revenues since EOY06.
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In 1H07, SMS’s vice like grip on data revenues continued to loosen a
bit with many carriers seeing an increase in non-SMS data revenues.
On an average, Japan and Korea have over 70-75% of their revenue
coming from non-SMS data applications, US around 50-60%, and Western
Europe around 20-40%.
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The top 10 operators increased their revenue by 17% during the first
half of 2007 compared to second half (2H) 2006 to reach $29 billion
in data service revenues.
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NTT DoCoMo’s position at the top of the wireless data world has been
challenged recently by several carriers esp. by its archrival KDDI.
Their data coordinates stand at ($17, 32%) and ($18, 32%)
respectively (please see PowerPoint for reference).
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The biggest percentage contribution by data ARPU has been
consistently registered (since mid 2002) by two Philippines carriers
– Smart Communications and Globe Telecom with almost 52% (or $3.6)
contribution coming from data services.
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Even though China reported approximately $5.9B in data revenues for
1H07, and the % contribution is over 20%, data ARPU is around $2.
For India data ARPU dropped below $1 for all major carriers.
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China Mobile with 338M remains the #1 subscriber followed by
Vodafone at 200M and China Unicom with 152M subscriptions.
Telefonica, América Móvil, SingTel, Deutsche Telekom (T-Mobile), and
Orange (France Telecom) are the next five largest telecom groups in
the world. In terms of individual carriers in a given country, AT&T
and Verizon Wireless occupy the #3 and #4 spot respectively ahead of
NTT DoCoMo, which is at #5. The two Chinese carriers round up the
top two positions and are likely to stay perched at their lookout
vistas for some years to come. Telecom groups in mature markets are
under enormous pressure to either come up with a global expansion
strategy or accelerate their existing plans. Carriers in Japan and
Korea are the most under duress.
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As far as 3G is concerned, GSA reported the crossing of the 200
millionth subscription in Q207. Both Japan and Korea continue to
expand their 3G base with both reporting over 50% penetration. 3G
has picked-up steam in both western Europe and North America per our
discussion in the cover story article “3G: Hitting the Mass Market”
published in
Wireless World Magazine.
Western Europe and US are approximately at 15% penetration (Italy
being the exception reaching 35%).
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China and India represent the biggest opportunities for
Infrastructure providers. China has postponed its 3G decision for
the umpteenth time and is having technical and political problems to
get something in place before the 2008 Olympics. India is going
through its 3G spectrum policy but unlike China is likely to resolve
the issues in short order. Some of the biggest infrastructure
contracts will come from these two countries that are looking to
expand coverage into rural area.
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Carriers with nationwide 3G networks and good distribution of
handsets are seeing uptick in data ARPU. The Japanese and Korean
carriers along with operator 3, Verizon, Sprint Nextel are all
seeing benefits of rolling out their 3G service. Deployment of 3.5G
technologies such as HSDPA and EV-DO Rev A (and B) are also gaining
momentum. Networks are getting deployed and market is being seeded
with some of the early handsets.
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In terms of applications, messaging accounts for lion-share of data
revenues. However, other services such as Mobile Music, Mobile TV
and video streaming, Mobile Games, IMS, LBS, Mobile advertising, and
others have captured industry’s imagination. Though not much talked
about, enterprise applications are also being adopted widely esp. in
North America as more workers become mobile and corporations seek
efficiencies in their operations and supply-chain.
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1H07 also saw the demise of yet another high-profile MVNO in the
form of Amp’D. Helio continues to struggle while the newer ones like
Sonopia and Blyk are testing the treacherous waters.
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Nokia eclipsed 100M unit sale in Q207 for the second time in history
(first being in Q406). Its 1H07 tally stood at 191.9M followed by
Motorola at 80.9M and Samsung at 72.2M. Nokia’s share of the market
went up to 37.9%. Motorola lost significant ground dropping 3.2% Q/Q
to 12.4%. Samsung gained as a result and ascending again to the
number 2 spot with a 14.1% market share. Sony Ericsson with 9.4% and
LG with 7.2% rounded up the top 5.
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Several operators reported Mobile Advertising as their key strategic
focus for the coming quarters, esp. China Mobile and Vodafone.
Sensing the opportunity to seek new sources of revenue stream, Nokia
launched its ad service as well. 1H07 saw tremendous M&A activity in
both the online and mobile advertising space. In a matter of weeks,
several billion dollar transactions took place highlighting the
intensity in preparing for the next battleground. 1H07 was also the
time when we were right in the middle of writing a book on the
subject and just submitted the manuscript last month (see below).
Your feedback is always welcome.
Chetan Sharma
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