Data and multimedia applications will be principal drivers of wireless transport, equipment spending and handset revenue by 2010

Revenue in the U.S. wireless market totaled $174.7 billion in 2005, up 10.7 percent from 2004, with an acceleration in handset revenue and a ramp-up in new wireless subscribers as key drivers of growth, according to TIA's 2006 Telecommunications Market Review and Forecast.  A similar trend prevailed in 2006, according to the soon-to-be released TIA’s 2007 Telecommunications Market Review and Forecast.  Growth in 2006 was led by a surge in handset revenue, reflecting the growing popularity of new applications and new wireless technologies requiring new handsets.  Capital expenditures were bolstered by fees for advanced wireless spectrum, and transport services continued to expand at double-digit rates, with growth in 2006 accelerating from 2005, fueled principally by continuing subscriber growth and a pickup in average revenue per user.  There was also a jump in services in support of wireless infrastructure.   

With wireless continuing to be one of the key growth drivers of the telecommunications market, here is a sneak peek at data that will be included in the 2007 report:

• In 2006, wireless market revenue totaled $190.4 billion, up 15.8 percent from 2005.

• Wireless penetration is expected to rise to 87.3 percent by 2010, a 14.9 percentage point advance from 2006.

• Wireless capital expenditures and overall infrastructure equipment spending is expected to average more than $30 billion annually despite the fact that the basic wireless infrastructure is already in place.

• Data and multimedia applications will be the principal drivers of transport, equipment spending, and handset revenue to 2010.  By 2010, data applications will generate approximately 24 percent of wireless communications revenue.  TIA projects wireless data revenue to expand at a 36.2 percent compound annual rate compared to 4.9 percent compound annual growth for wireless voice revenue.

• Wireless subscribers were willing to pay significant sums – more than $500 million in 2006 – to download music to their mobile phones.  The music market shifted dramatically in 2005 from ring tones to ring tunes, a development that boosted the market, since ring tunes are more expensive than ring tones. 

• Beginning in 2002, handsets capable of downloading additional games, for an incremental fee, entered the market, and since then, fewer handsets come preloaded with games.  As enhanced wireless technologies penetrate the market through the proliferation of state-of-the-art handsets, the revenue potential of vide games will increase.

• One of the most promising applications for generating incremental revenue is mobile video.  Currently, approximately 20 percent of mobile phones can accommodate video.  As new handsets penetrate the market, the potential for video applications will expand.  At the same time, if demand for video gains momentum, it will drive spending on new handsets. 

• One underrepresented component of the wireless market is children, among whom wireless penetration is less than 30 percent.  By offering services for children and, more specifically, for their parents, wireless carriers hope to expand subscribership. 

• Internet applications are among the most important drivers of the industry.  Accessing email, Web sites and weather, travel information, directories, sports scores and similar information are popular among wireless subscribers. 

The 2006 and 2007 editions of TIA’s Telecommunications Market Review and Forecasts provide an overview of telecom's interrelated market segments including landline network, enterprise and consumer, wireless communications, and international markets. The 2006 edition is available in hard copy or on CD-ROM.  To learn more about what is driving the telecommunications industry reserve your copy of the 2007 edition today.  Buy the 2006 version NOW and save 20 percent, and you’ll also receive this same discount on the 2007 edition.  To order, please contact Mary Lou Coffman at +1(703) 907-7074 or email marketreview@tiaonline.org. 

Data from TIA’s 2006 Telecommunications Market Review and Forecast was recently featured in a special advertising supplement on mobile wireless broadband in Fortune magazine.  The section is available at http://www.timeinc.net/fortune/services/sections/fortune/telecom.html. 

< Back to Top >