Revenue from consumer mobile data traffic to grow

The worldwide reveune from consumer mobile data traffic is expected to hit US$71 billion by 2007, as more users adopt the technology.

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By  Neil Denslow Published  February 17, 2003

The worldwide reveune from consumer mobile data traffic is expected to hit US$71 billion by 2007, according to Ovum, as more users follow Europeans in adopting the technology.

The research firm expects traffic and subscription revenues generated by consumers using their mobile phones to send data to account for 93% of operators’ data revenues this year and 78% by 2007. Premium content and other transaction revenues will boost these figures even further.

“With the take off of multi-media services (MMS) and the increasing availability of Java phones, 2003 is the crunch year to prepare for consumer mobile applications,” says Michele Mackenzie, senior analyst, Ovum.

“Picture messaging and mobile gaming are just two of the key applications that will generate new growth and operators must ensure they are best positioned to offer consumers these services. This means investing in the technologies and tools, such as wireless middleware, which will enable operators to develop the platforms and services for consumer applications,” she adds.

Ovum’s also states that messaging, including SMS, MMS picture messaging, instant messaging and mobile e-mail, represents 85% of total consumer mobile data spend. Information and entertainment, meanwhile, account for 10% and 5%, respectively. This breakdown is expected to change slightly by 2007, but messaging will still dominate, accounting for 80% of total consumer spend.

“This is good news for operators as messaging is currently an ‘operator keeps all’ application,” says McKenzie. “It mainly depends on the network and therefore requires few or no third party partnerships, operators do not have to share the revenues it generates.”

However, the potential of the information and entertainment categories should not be ignored. “While traffic revenues from these groups are significantly lower than messaging, operators will boost their revenues through premium content and transaction value from revenue sharing agreements with third parties, such as content developers,” she suggests.

Most telcos are aware of this, but not all are in a position to benefit from this possibility, warns Mackenzie. “Attracting the best content and application developers means ensuring a robust services platform with middleware that allows good partner management,” she says. “Operators need solid systems that allow them to simultaneously manage numerous contracts.”

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