Decline In Total Voice Revenue in 2008-2009 for the U.S. Consumer Wireless Industry

IDC: Although the U.S. wireless service provider industry rocketed ahead in 2005, adding approximately 21.8 million new subscribers, IDC finds the U.S. consumer wireless industry rapidly approaching key turning points in 2006. With subscriber growth slowing and continued voice average revenue per user (ARPU) erosion factors, total voice revenue is expected to decline in the 2008-2009 timeframe.

The U.S. wireless service provider industry had another stellar year in 2005, crossing the 200 million subscriber and 70% market penetration thresholds, receiving positive market response to the first handset-based 3G applications, and with providers reporting they had crossed the 10% data ARPU level. Another key dynamic in 2005 was that mobile virtual network operators (MVNO) moved into the market entry phase; two key roles that MVNOs will play over the forecast period are to force the broader wireless service provider market to adopt a retail market model approach and to increase the overall level of service provider competition.

Total voice service revenue declines late in the forecast period will jolt an industry accustomed to 25 years of voice revenue growth and further emphasize the importance of data services to the future of the industry. With the wireless subscriber market approaching saturation, driving further adoption usage of data services will be critical to maintaining total ARPU and service growth in light of continuing voice ARPU erosion

The key market dynamics over the forecast period include: the slowing of total subscriber growth; increasing levels of competition from MVNOs, followed by further service provider consolidation; market model evolution among established national wireless service providers from a utilities-type market model to a retail market model; continued voice ARPU erosion; strong data revenue growth offsetting emerging data pricing erosion; the increasingly critical role of content and entertainment in driving data service revenue; strong business market growth; new and emerging user segments; new uses of wireless contributing to continued subscriber and total revenue growth over the forecast period; and total average ARPU remaining relatively stable across the forecast period.

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