Telco Predictions for 2011

According to ABI Research, more than seven trillion SMS messages will be sent worldwide in 2011, from nearly 4.2 billion mobile subscriptions. Other predictions: Wi-Fi location will outstrip all other location technologies; LTE will continue its “Long Term Evolution”; mobile commerce sales set to explode; and Nokia Siemens Networks takes first place in the latest Vendor Matrix, with Huawei and Alcatel-Lucent in second and third spots.

Messaging is still more prevalent among younger subscribers, but as they replace older subscribers messaging will get a further boost. Messaging, which for ABI includes four types of communication – SMS, MMS, mobile email and Instant Messaging – is being increasingly regarded as something of a commodity by users, due to falling delivery costs and high competition.

According to industry analyst Aapo Markkanen, “When these trends towards commoditization are combined with the wider adoption of mobile email and IM services, the revenue proportion of SMS and MMS against the market total is expected to decline.”

Messaging is, increasingly, a tool for the enterprise as well as for individuals. ABI practice director Neil Strother notes that, “Mobile messaging has distinct advantages for companies communicating with their customers. It is universal, cost-effective and reliable, and most people have their phones with them and switched on most of the time.”

However the rate of mobile phone adoption generally will gradually decline over the next five years, and growth in number of new customers starting to use messaging will likewise slow gradually.

ABI Research believes that the future of mobile messaging will increasingly be in unified toolkits that mash up and converge text and multimedia messages, IM chats, emails and voicemails.

LTE services in the US will generate more than $11 billion in 2015

When it comes to mobile network infrastructure discussions, LTE is the name on everyone’s lips. Yet the very meaning of the acronym – “Long-Term Evolution” – is a hint that it isn’t going to happen overnight.

LTE’s deployment as the mainstay 4G technology will take place gradually, and won’t even begin to gather real steam until 2013. Nonetheless, LTE is forecast by ABI Research to generate more than US$11 billion in service revenue in the United States in 2015, with nearly a further US$650 million to come from Western Europe.

The LTE service revenue growth curve for Western Europe is practically a straight line. That contrasts sharply with constantly accelerating revenue growth in the US, and is largely due to the sometimes exorbitant amounts European network operators paid for their 3G spectrum: many of those operators want to squeeze every drop of value from their 3G investments before migrating to 4G.

Smartphones and mobile devices

Shipments of ultra-low-cost handsets will grow to more than 360 million by 2015, representing a 2010-2015 CAGR of over 22%, while shipments of low-cost handsets will reach 249 million by the same time period.

The key markets for these entry-level devices are China, India, Africa, Latin America, and some developing economies in Asia. While many emerging markets have experienced significant increases in the numbers of mobile subscribers, there remains a large portion of the population that has yet to purchase a mobile device or mobile services.

The downward pressure on entry-level device prices will persist for years to come. The low-cost sub-segment is now defined by devices that cost less than US$60, with prices expected to fall to US$40 by 2015.

The ultra-low-cost sub-segment, currently comprised of phones with price tags of US$25 or less, will see handsets available to the end-user for US$16.00 or less.

As the smartphone phenomenon has bloomed, large European corporations and the European Union appear to feel left out, particularly France Telecom, Deutsche Telekom, Telecom Italia and Telefonica. Investment efforts are disjointed and conflicting. The European Union is investing more than €33 million and European corporations untold millions more to try to reclaim a stake in the smartphone OS and apps game.


(C) ABI Research