SNL Kagan Expects Wireless Data Revenue To Increase At A 16% Annual Rate Over The Next Decade

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Carriers will rely on data offerings to drive revenue growth as service revenue flattens.

But we think the open-endedness of wireless data options, especially related to location sensitive and personalized mobile commerce and advertising opportunities, could give wireless a second wind in the not too distant future. The wireless industry's biggest growth opportunities may well be the services we haven't even seen yet.

According to SNL Kagan's latest wireless projections, the recent launch of Apple's iPhone 3G along with new smart-phone offerings from other providers is setting the stage for mobile data to dominate the U.S. wireless industry. SNL Kagan expects mobile data revenue to increase by a compound annual growth rate of 16% from $24 billion in 2007 to over $100 billion in 2017, compared to barely a 5% CAGR for total service revenue over the same period.

SNL Kagan's estimates show average data subscribers growing at a CAGR of 5.8% to 249.5 million by 2017, comprising 77% of total wireless subscribers. During the same period, total wireless subscriber growth will increase by only 2.9% per year on average.

SNL Kagan predicts that by 2017, wireless subscribers will reach 90% per capita penetration. As the market nears saturation, sales of new data services are becoming the primary driver of revenue growth. The largest source of mobile data use continues to be messaging and mobile email, with 62% of wireless subscribers utilizing these services by 2017. Mobile web users, growing from 18% of wireless subscribers in 2007 to 52% in 2017, will comprise the second-largest category.

Within the mobile content categories, SNL Kagan expects mobile video/TV to ramp the fastest, with a 10-year CAGR of 22.5% versus 12.7% for games and 13.1% for music. Between 2010 and 2012, mobile video/TV usage will get an extra boost as phones compatible with the ATSC-MH mobile broadcast TV standard emerge. Gaming will increasingly infiltrate the mobile phone medium as younger users age.

"Right now the visible top line growth outlook in wireless is relatively modest, with declining sub gains and so much pressure on voice revenue countering the surge in data," said SNL Kagan analysts John Fletcher and Sharon Armbrust. "But we think the open-endedness of wireless data options, especially related to location sensitive and personalized mobile commerce and advertising opportunities, could give wireless a second wind in the not too distant future. The wireless industry's biggest growth opportunities may well be the services we haven't even seen yet."

SNL Kagan's wireless projections are available exclusively as part of the SNL Kagan Information Service. For more information on this report and other media and communications data within the SNL Kagan Information Service, call 866.296.3743 or email SNLKaganSales @ snl.com.

About SNL Kagan

SNL Kagan, a division of SNL Financial LC, is a comprehensive resource for financial intelligence in the media and communications sector, including the broadcasting, cable, entertainment, motion picture, telecom, wireless, satellite, publishing and new media industries. The SNL Kagan suite of products integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. For more information, visit http://www.snlkagan.com.

About Kagan Media Appraisals

Kagan Media Appraisals, the consulting arm of SNL Kagan, offers custom studies, white papers, briefings, business plans, research reports and appraisals from SNL Kagan's team of expert analysts. KMA is recognized industrywide for actionable advisories, expert opinions, best practices, regulatory assessments and market data. Contact KaganConsulting @ snl.com or 831.624.1536 for more information.

Visit the SNL Press Room at http://www.snl.com/press_room to learn more about resources available to members of the media.

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