Accelerating Data Usage Spurred by Proliferation of
Smartphones and Mobile Apps Shifts Wireless Carrier Revenue Mix, Finds PwC Report
Mobile Internet Access Now Accounts for 25 Percent of Prepaid Data Revenues, a Significant Jump from just 1 Percent in 2009
NEW YORK, March 22, 2011 – Surging data demand driven by the mobile mindset of consumers, the proliferation of smartphones and onset of mobile apps is further revolutionizing the wireless scene, according to a new PwC US report: A range of possibilities in a changing wireless landscape: 2010 North American wireless industry survey. According to PwC, demand for new services such as video streaming (which consumes roughly 25 times the network capacity as a voice call), the importance of service quality, and the migration toward fourth-generation (4G) technologies has prompted carriers to continue investing in their infrastructure despite the challenging economy.
“2010 was the year of data, with smartphones accounting for more than 30 percent of total wireless handset sales and delivering a higher average revenue per user for carriers than traditional devices,” said Pierre-Alain Sur, US wireless industry leader, PwC. “However, the rising data consumption brings significant new challenges for carriers. They will need to determine how best to monetize the additional data usage among price-sensitive customers and how to finance the network improvements necessary to keep pace with demand.”
According to PwC, smartphone sales, as a percentage of revenue, increased to 38 percent in 2010 for carriers with revenue over $5 billion, up from 19 percent in 2009. Prepaid plans continue to represent a significant and growing proportion of carrier revenues, an average of 22.5 percent of total service revenue, for all surveyed companies. Internet and email access from mobile devices accounted for 25 percent of prepaid data revenue in the 2010 survey, a dramatic spike from just 1 percent as reported in the 2009 survey.
With mobile apps transforming the way consumers and enterprises communicate and connect remotely, 91 percent of surveyed companies have launched a portal to facilitate mobile app downloads. Additionally, carriers have added two new data services – location-based services and video calls and messaging – as new revenue sources in 2010.
The increase in 3G and 4G enabled users – in combination with a changing service mix toward data and video intensive services such as mobile TV – will continue to create significant capacity challenges for operators. This is driving network investments necessary to support the rapid increase in data usage growth. Capital expenditures averaged 20 percent of service revenue, which is consistent with 2009 results. In 2010, 67 percent of surveyed companies indicated that at least 90 percent of their subscriber base was covered by 3G technology compared with only 43 percent in 2009.
Furthermore, the survey finds that operators have begun to migrate to 4G technology, with three companies already using it, up from one company in the 2009 survey. Two additional respondents noted that they expect to begin utilizing 4G technology by 2011, and another two plan to implement it by 2012.
“Even during the recessionary period of this survey, the wireless industry remained strong. Looking into 2011, as carriers continue their renewed focus on profitability, they will need to remain laser-focused on investing in their networks. To contain subscriber churn and boost margins, operators will seek new alliances with content providers in offering new services, games and content exclusive to their networks,” added Pierre-Alain Sur.
About the Survey
The PwC 2010 North American Wireless Industry Survey is an annual publication that covers the financial and operational reporting policies and practices of wireless service providers. The 2010 survey comprises all the major U.S. and Canadian operators and is conducted by PwC’s Entertainment, Media and Communications industry practice, which prepares the survey questions, solicits company participation, and compiles and analyzes the survey results. The survey period covers calendar year 2009 as well as certain information as of June 30, 2010. Companies participate voluntarily, and individual survey results are kept confidential by PwC.
The full report is available at: www.pwc.com/us/en/industry/communications/publications/2010-North-American-wireless-industry-survey.jhtml
About the PwC Network
PwC network firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.
© 2011 PwC. All rights reserved. “PwC” and “PwC US” refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
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