Analysis Warns of ARPU Danger

Mobile operators may experience substantial decline in ARPU in developed countries, as voice prices decrease, non-voice services fail to capture consumers interest, and mobile phones lose their fashionable image, according to a forthcoming report, The Future of the Global Wireless Industry: scenarios for 2007-12, to be published by Analysis, the global advisers on telecoms, IT and media ().
There is increasing uncertainty about the future of voice and non-voice services, the technologies that will be deployed and the extent to which growth will shift from developed to developing markets,” says co-author Dr Alastair Brydon. These uncertainties could lead to radically different outcomes for mobile operators and equipment vendors.”
Analysys has defined three plausible scenarios for the evolution of the wireless industry during the next five years: Emerging Markets Thrive; Cellular Goes Indoors; and Low-cost Data Pipes.
In the Emerging Markets Thrive scenario, mobile penetration saturation, intense price competition for voice telephony and widespread failure to achieve robust non-voice revenue growth leads to significant consolidation in developed markets. Mobile operators embark on aggressive cost reduction initiatives, such as network sharing, and avoid significant further investment to maintain profitability levels. Operators, handset and infrastructure vendors and investors focus on growth opportunities in developing countries, for voice telephony and mobile Internet services.
We are already seeing early signs of this scenario,” says Dr Mark Heath, co-author of the report. Despite a 23% increase in voice usage per capita, the high level of fixed-mobile substitution in Finland has not increased ARPU. Furthermore, many mobile operators are finding it difficult to achieve non-voice ARPU of more than $8 (4) per month. By contrast, Nokia sold almost twice as many handsets in developing countries as it sold in Europe and North America combined in the first quarter of 2007.”
The report examines a number of key trends within the wireless industry and assesses their potential effects by defining and evaluating the three plausible scenarios for the industrys evolution. The report identifies actions for mobile operators, and handset and infrastructure vendors.
The report is available to purchase online here, priced at 1,900 plus VAT. For more information, telephone Analysys on +44(0)1223 460600 or email research@analysys.com

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