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CTIA Releases 2007 Survey Results, Slew of Products and Strategies Announced at Wireless Exhibition
3 Apr 08
The annual CTIA Wireless Exhibition has brought forth industry statistics and a number of announcements by the main carriers.
Global Insight Perspective | | Significance | Subscriber growth continues apace but data maintains ARPU as the value of voice falls. | Implications | Operators have focussed on new features and data-centric handsets in the showcase event. | Outlook | Store experiences appear to be gaining weight as more complex and feature-rich devices reach out to a broader mass-market audience. |
Survey Results The CTIA, the Wireless Association, has been holding its annual exhibition 'CTIA Wireless 2008', prompting a slew of announcements from companies involved in the telecoms industry. It has also used the occasion to release the results of its latest half-yearly survey for the wireless industry in the United States, up to the end of 2007. Growth continued to be strong, with industry-wide revenues growing by 10.7% to reach US$138.8 billion, while subscribers were up by 22.4 million or 9.6% year-on-year (y/y), taking penetration to 84%. Overall, voice minutes of use (MOU) rose by nearly 18% y/y, showing that subscribers continue to talk more, although per-minute costs have dropped as large bundles of minutes are included in most tariffs. Monthly bills bottomed out in 1998 at US$39.43 but have climbed back and have been relatively stable, fluctuating around US$50 since 2003; between 2006-2007 monthly bills dropped 1.5% to US$49.79. More recent stability has been helped by data revenues increasing as voice pricing has faced pressure. Data revenues were up 53% y/y to US$23 billion in 2007, around 17% of all wireless service revenues. Text (SMS) messaging remains the most popular data service, with 48 billion messages reported in December 2007—up by 157% y/y. MMS (picture messages) have also gained some traction, with 4 billion sent in the second half of 2007 compared with 2.7 billion in the whole of 2006. Roaming revenues, which had been falling since peaking in 2004 at US$4.2 billion, rose again by 7.1% between 2006 and 2007 to US$3.7 billion—likely the result of an increasing number of users taking packages from the main carriers, which bundle in roaming minutes. The build-out of networks continued with an additional 17,686 cells deployed to up the total by 9.0% to 213,299. This was a significantly faster cell roll-out than in 2005-2006, when 11,924 new sites were deployed, showing renewed efforts to expand and improve coverage likely helped by the 3G deployments over the year. The Big Three The top three carriers announced the release of their latest handsets and other moves at the show: - The chief executive officer (CEO) of Verizon Wireless, Lowell McAdam, made a keynote presentation pushing for free competition, and warned against moves that could make the innovative industry a "regulated utility" and stifle innovation—a consideration Federal Communications (FCC) head Kevin Martin would appear to have borne in mind (see United States: 2 April 2008: Open Wireless Access Moves May Help Dismiss Skype Application for Regulatory Action). Verizon produced a report showing that it led the industry with regard to customer satisfaction and loyalty—a given considering the firm's leading churn metric. It also announced new store designs that will place greater emphasis on demonstrating services and allowing customers to test out devices, as well as making customer-service interactions simpler. Several content deals were announced, including Bollywood music videos, the Spanish language Univision Móvil video channel and CondéNet channel, featuring content from the likes of Style.com and concierge.com, entertainment news website TMZ.com, a GameTrailers channel, FunnyorDie.com and My Local TV News, all releasing channels onto V CAST Video services. Handset releases had a decidedly business-centric bent with the BlackBerry Curve and Moto Q 9c emailers. The XV6900 is a Windows Mobile 6-based touch-screen personal digital assistant (PDA) (essentially a Verizon-branded HTC Touch). The Samsung SCH-u740 was updated to become the 'Alias', which sports a similar dual-screen landscape format and QWERTY keyboard to the LG Env 2, which completed the line-up.
- AT&T had less to announce with the launch of the Motorola Z9 slider phone overshadowed by rumours circulating that a 3G iPhone is imminent—largely based on a reported wind-down in the stock levels of existing handsets. It also announced that some of its stores would be upgraded with the Microsoft Surface, the 30-inch table-like 'desk computer' launched by Microsoft that uses advanced touch and device recognition. The Surface will be used to help customers learn about device features simply by placing it on the screen, explore coverage maps and, in the future, customise a device by dragging and dropping content into it.
- Sprint launched two new direct connect devices—Sanyo Pro-200 and the Sanyo Pro-700 (shortly to become Kyocera (see Japan: 21 January 2008: Kyocera to Acquire Sanyo Mobile Handset Business)). These are CDMA handsets using Qualcomm's QChat technology to hook up to the Nextel Direct Connect network, a strategy that Sprint has been aiming to enable for some time in the long-term wind-down of the iDEN network (see United States: 18 October 2007: Sprint Sees QChat on Course for 2008). A number of additional handsets using QChat are planned for the summer from LG, Samsung and Motorola. Sprint also announced the launch of the BlackBerry Curve 8830, a small mobile broadband modem from Sierra Wireless and the Samsung 'Instinct'. The latter is positioned as an iPhone competitor with EV-Do Rev. A connectivity, a large touch-screen, haptics, GPS and up to 8 Gb memory through secure digital (SD) cards.
Outlook and Implications The majority of devices announced here have been advanced data-centric devices. While CTIA is a showcase event, data revenue growth has supported user revenue, which has driven this trend and the reported success of the iPhone in further boosting data usage pushes it further into the gaze of the operators. As devices become more complicated, in-store demonstration, training and support become more important—as reflected in the moves announced by AT&T and Verizon to improve in-store experiences to improve retail sales and boost feature usage.
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