US Data Services Revenues Up 22 Per Cent Year-on-year

The analyst, Chetan Sharma, has released its Q2, 2011 report on the US wireless market. US wireless data service revenues grew 5 per cent Q/Q (quarter-on-quarter) and 22 per cent Y/Y (year-on-year) to $16.2bn (£9.8bn) in Q2 2011. US mobile data service revenues for the US market are on track to reach $67bn in 2011.

Verizon and AT&T had a good mobile data quarter, accounting for 77 per cent of the increase in data revenues in Q2 2011. For the quarter, AT&T and Verizon accounted for 69 per cent of the market data services revenues, and 62 per cent of the subscription base.

Verizon maintained its No.1 ranking, just edging past NTT DoCoMo who came in at number two with $5.77bn in data revenues for the quarter. AT&T maintained its No.3 position, with $5.4bn in data revenues. Sprint and T-Mobile maintained their No.6 and No.8 rank in the top 10 mobile data operators list for Q2 2011. The proposed merger of AT&T and T-Mobile will make AT&T No.1 by a distance, and place 20 per cent of the global mobile data revenues in the hands of the top two US operators. AT&T and Verizon will become the No.1 and No.2 players respectively.

ARPU goes down – and up
Overall ARPU increased by $0.41. Average voice ARPU declined by $0.48 while average data ARPU grew by $0.89 or 5 per cent Q/Q. The average industry percentage contribution of data to overall ARPU was 36.3 per cent in Q2 2011 and is likely to touch 40 per cent by year’s end. Verizon is likely to be the first to eclipse the 40 per cent mark, with AT&T a close second.

Verizon and Sprint were neck-and-neck in data ARPU, followed by AT&T. In terms of per cent contribution, all top three operators exceeded the 35 per cent mark. T-Mobile ended the quarter with almost 30 per cent of its revenue coming from the data services. Chetan Sharma expects data revenues to exceed voice revenues in the US market in early 2013. It also expects per MB data usage in the US to reach 675MB by the end of 2011, just behind Sweden, which is likely to end up at 760MB.

Helped by the growth in connected devices, the overall net-adds increased by 4.4m, with Verizon accounting for almost 50 per cent of the growth. For the seventh straight quarter, AT&T reported more net-adds from connected devices than post-paid subs. AT&T now accounts for 43 per cent of connected devices in the US with a cellular subscription of some sort. Overall, AT&T has 43 per cent of the connected device share of the market. The connected device segment growth slowed down to 3 per cent Q/Q but is still up 37 per cent Y/Y.

Sprint continued on its comeback trail by adding more than a million subscriptions for the third straight quarter, first time it has done it since Q2 2005. T-Mobile however continues to be sandwiched between the top three and the next three, and hasnt been able to add post-paid subs for five straight quarters. The net-adds declined for third straight quarter.
Apps and services
The US unseated the Philippines as the king of text messaging, with almost 664 messages per subscriber per month, whereas the Philippines is seeing a sharp decline in per-user messaging, due to Facebook and app messaging. Some European operators are also experiencing the pain of declining SMS usage. While the percentage share of data revenues is declining for messaging, revenue growth remains strong, with almost $5bn in revenues.

The market is finally starting to see activity in the mobile commerce and payment services, as well as in various industry verticals like healthcare, retail, and education. Q2 2011 also saw tremendous activity in the mobile commerce and payments space, with lot of announcements from operators, internet players, and start-ups, as well as retailers and the eCommerce players. All are vying for a piece of the mobile wallet, and Chetan Sharma notes that there is much more to come in the next 12 months.

Smartphones continued to sell at a brisk pace, and accounted for 55 per cent of the devices sold in Q2 2011. 35 per cent of all smartphones being sold globally are being sold in the US Operators are averaging 70 per cent of their post-paid sales as smartphones, with Android dominating, though iPhone leads in mindshare.

For a first time in recent memory, Nokia sold less than 100m devices in a quarter, and its market share shrank to 22 per cent, from a once dominant position of almost 40 per cent. Apple unseated Nokia as the king of the smartphone hill, but Samsung is right behind and is likely to overtake Apple later this year.

85 per cent of the tablets in the US use wi-fi only, which means that the operator channel is not a necessary distribution channel. Operators who start to bundle multiple devices by single data plans and data buckets are going to see a better yield in this category, the analyst says. While the definition of 4G stays muddled, Sprint added 1.7M WiMax subs and Verizon increased its LTE count by 1.2m.

Looking beyond the US, Chetan Sharma notes that in the race to a billion subscriptions, India is battling it out with China. India went past 850m subs in Q2 2011, while China went past 900m. By mid-2012, both India and China will have more than a billion subscriptions. China Mobile crossed the 600m subscription mark, however its 3G introduction has had a tepid response thus and its 4G strategy remains in flux.

Chetan Sharma will be discussing the global mobile ecosystem at its annual mobile thought-leadership summit, Mobile Future Forward, in Seattle on 12 September. There’s more information about that event here. And more information about the report here.