Sep
28
2011

Mobile Revenue in Europe Now is Flat, Where Will Growth Come From?

Not so long ago, mobile was what was driving telecom service provider revenue. In the U.S. market, for example, where in 1997 about half of U.S. telecom revenue was generated by long distance revenue,by 2007 mobile revenues represented about half of total revenues. Mobile service revenue was important because it replaced long distance as the industry revenue mainstay.

In 2007, according to the Organization for Economic Cooperation and Development, mobile services alone in 2007 accounted for 61 percent of all subscriptions while standard phone lines have dropped to 26 percent. And the change has come swiftly: in just seven years, from 2000.

Mobile revenues now account for nearly half of all telecommunication revenues—41 percent in 2007—up from 22 percent 10 years earlier. Revenue sources have changed

The immediate problem now is that mobile revenue growth has flattened in the developed markets, and cannot provide adequate revenue support as voice services, on both fixed and mobile networks, continue to decline. True, mobile data revenues will grow. But many believe mobile data revenues will grow only enough to offset voice losses, the Yankee Group estimates.

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Increasing adoption of mobile broadband services for former “voice and text only” accounts will help. But the wild card is the effect of subscriptions to connected devices such as tablets. In developed markets, nearly everyone who wants a mobile device already has one. In Europe, for example, mobile subscriptions are essentially flat, says the Yankee Group.

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Also, up to this point, added data revenues are not compensating for declining voice revenue per user. To boost mobile data by significant amounts, service providers will likely have to hope for significantly higher mobile connections for tablet and other devices. European average revenue per user is declining, the Yankee Group says.

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