A global market of 785 billion USD in 2009 and IDATE predicts a 5% increase for 2010
IDATE provides regular analyses of the central trends shaping mobile markets around the globe – networks, devices and services. To mark the Mobile World Congress in Barcelona (15-18 February 2010), IDATE is publishing the fourth edition of its special white paper: “Mobile 2010 – Markets & Trends”, which draws on several IDATE market reports.
After a marked decline in 2008 – to +3.8%, or two points less than in 2007 – growth in the telecom services market dropped significantly once again in 2009. After generating revenue of 1,417 billion USD in 2008, sales are expected to reach 1,441 billion USD in 2009, in other words an increase of only 1.7%: the lowest growth rate since 2002.
“This decline is due to structural phenomena, i.e. the maturity of the markets that have driven growth in the past, namely mobile telephony in industrialised countries, combined with competitive and regulatory pressures whose impact has been further aggravated by the economic downturn”, says Carole Manero, Project leader of the “World Telecom Services market” report.
Although based solidly on business models tied to subscriptions and technologies that users in industrialised nations consider essential, the telecom services market is not likely to emerge unscathed from the recession. It does nevertheless have some very strong assets that will help put it back on track, including the fact that consumption volumes continue to rise apace with the growing user base. In fixed markets, the growing Internet services market is no longer fully offsetting the decline in fixed line calling, added to which the growth rate for mobile services revenue continues to shrink – decreasing by two-thirds between 2007 and 2009.
Mobile services nevertheless remain the chief driving force
With total sales estimated at 755 billion USD in 2008 and at 785 billion USD in 2009, mobile services nevertheless remain the chief driving force behind growth as a whole. They have accounted for more than half of all telecom services revenue worldwide for four years running (representing an estimated 55% in 2009), and generate more than twice as much income as landline calling. The mobile market’s growth is being sustained by a massive rise in customer numbers which grew by 14% worldwide in 2009: up to 4.5 billion (or by more than 46 million customers a month!), whereas the market’s value has been declining year after year.
Fixed telephony continues its decline which began in 2002, and at an ever increasing pace. In 2009, the number of fixed lines shrank again, and average revenue per line has decreased by around 2% annually for the past two years. Fixed telephony has decreased in value by 11% in three years and, at the end of 2009, it accounted for only 26% of the telecom services market worldwide, compared to around 33% in 2006.
Generating an estimated 275 billion USD in 2009, data and especially Internet services continue to increase their weight in the equation, which has risen slowly but steadily: by 0.5 to 0.7 points annually since 2006. Their share of the total market reached 19% in 2009, up from 17% in 2006 and less than 15% in 2001, although their contribution to growth is no longer offsetting the decline in fixed telephony revenue: 19.3 billion USD in losses for fixed voice, compared to 14.1 billion USD in gains for fixed data services. Excluding Internet, the data services market remained unchanged in Europe and North America in 2008 compared to 2007, and is thought to have suffered a decline in 2009.
The growth of Internet and data services revenue has been spurred by the remarkable rise of the Internet, and especially of broadband access. In terms of volume, the number of broadband subscribers grew by close to 63.3 million, which translates into 5.3 million new subscribers a month worldwide. At this pace, we predict that the 500 million mark will be reached some time in 2010. At the end of 2009, broadband access accounted for three quarters of all Internet connections around the globe.
LTE: the right answer?
IDATE predicts that, by 2015, a total of 380 million subscribers in the US, the EU-5, Scandinavia, China, Japan and South Korea will have access to mobile data services over LTE networks.
• The cost of an LTE rollout for an MNO operating both GSM and UMTS/HSDPA networks amounts to 2.1 billion EUR to cover the urban and suburban population. This figure applies to a nation of 50 million inhabitants with the population density/distribution properties of a Western European country.
• Innovative services and business models, such as VoLTE which can bring benefits to both operators and subscribers, need to be deployed if operators are to maximise the potential of LTE deployments, maintain ARPU levels and continue to be a smart pipe.