US Wireless Data Market - Mid
Year Update 2006
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US wireless data market is growing at an impressive
rate. Top 4 US carriers (Cingular, Verizon, Sprint Nextel, and
T-Mobile) accounted for over $6.3B in wireless data revenues for the
first half of 2006. Overall, wireless data service revenues exceeded
$7B and the figures are likely to exceed $15B for the year 2006.
This is almost a 75% jump from end-of-2005 number of $8.6B. The
growth rate slowed down only slightly from 2004-2005 growth rate of
87%. SMS and data transport still drives bulk of data revenues but
their percentage share is declining.
Among the top 4 US carriers, Verizon has made the
most impressive strides in the last 4 quarters, increasing their
wireless data revenues by a whopping 114%. Next Sprint with 71%,
T-Mobile with 65%, and Cingular with 54% also netted impressive
Verizon became the first US carrier to net over $1B
in wireless data revenues in a quarter. Cingular was close second
with $979M and Sprint with $935M are likely to cross the $1B mark
Sprint retains its leadership position of highest
wireless data ARPU in terms of absolute dollar amount at $7.25 but
lost its number one spot in the % data ARPU to Verizon which now
leads the US carriers at almost 13%. Average data ARPU is now $6.3
Overall ARPU (voice + data) increased slightly from
Q106 but declined $0.27 from Q405. The general trend is towards slow
decline. Data revenue is barely keeping up with the decline in voice
ARPU. On an average voice ARPU has declined 8% from a year ago and
data ARPU has increased 48%. Average Overall ARPU was $53.04. Sprint
led with $62 followed by T-Mobile at $51, Verizon at $49.7, and
Cingular with $48.4.
If the current trends hold, Verizon Wireless is
likely to surpass Cingular Wireless as number 1 US carrier by Q307.
US had about 7M 3G subscribers by Q206, primarily
from Verizon and Sprint Nextel. With Cingular joining the fray, the
3G growth is expected to accelerate with 2007 being the inflection
US wireless subscriber penetration stands at
approximately 74% and is likely to exceed 78% by the end of the
Top 4 carriers added 12.7M subscribers from Jan-Jun
The top 4 US carrier account for 79% of the
subscribers, 86% of the service revenues, and approximately 95% of
the wireless data revenues.
US Off-net revenues for the year are likely to exceed
Data ARPU of CDMA/EV-DO carriers was 20% higher than
Several high-profile MVNOs were also launched in the
last few months and the overall results have been disappointing
primarily due to poor execution, instant crowding effect, and
competition from big 4.
US wireless carriers are steadily climbing in their
wireless data performance as compared to their peers worldwide.
Verizon, Cingular, and Sprint ranked number 4, 5, and 6
respectively, amongst the top 10 operators worldwide in terms of
total wireless data revenue generated for first half of 2006.
The #1 carrier worldwide in terms of total wireless
data revenue for the first six months of 2006 is NTT DoCoMo which
has maintained its position for a number of years. It is now
generating almost $900M/month from wireless data revenues.
The top 10 carriers in terms of total wireless data
revenues for 1H06 in order of rank are NTT DoCoMo, China Mobile,
KDDI, Verizon Wireless, Cingular Wireless, Sprint Nextel, O2 UK,
Vodafone Japan, SK Telecom, and China Unicom. (6 Asian, 3 US, 1
Europe. Who says US is behindJ). Vodafone Germany, TMO Germany, and
TMO US are also closing in.
All the top 10 carriers in the list exceeded $1B in
data revenues for the first six months of 2006. China Mobile and
China Unicom benefited from their huge subscriber base of 274M and
135M respectively while DoCoMo and KDDI did well because they are
generating over $17 (or 28%) in wireless data ARPU.
The top 10 carriers accounted for almost $24B in
wireless data revenues for the first six months of 2006. The top 10
carriers account for approximately 700M (or approx 28%) subscribers
In terms of wireless investments, over $2.8B was
invested in wireless related companies/startups from Jan-Jun 2006
(this figure jumped to $4.1B in July). Source: Rutberg. Mobile
TV/Video, Mobile Personalization, Mobile Search and Advertising,
Semiconductor, Carrier infrastructure, Device design and development
are hot areas. M&A activity also picked up quite significantly.
WiMax industry got a big boost with almost $1B
investment in Clearwire and due to Sprint Nextel’s announcement of
WiMax deployment. Sigh of relief for Intel and Samsung. Puts
pressure on Qualcomm. Maybe Intel will renegotiate with Clearwire.
Worldwide Handset market share: Nokia and Motorola
dominated with 35% and 23% market share respectively. Samsung with
12% stands third. Source: iSuppli. Though Apple’s iPhone rumors have
been clouding the market, it is Motorola which continues to lead in
launching must-have handsets. Windows mobile is starting to make
serious inroads in the handset market but performance issues and
high price points deter mass market adoption.
comments are always welcome.
© Chetan Sharma Consulting 2006. All
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