Feeds

2006: crunch time for mobile firms

Ask Santa for a better business model...

The Power of One Infographic

Next year will be difficult for mobile companies as their traditional business model comes under threat, Arpu continues to fall and wireless VoIP starts to have an impact.

Despite the problems a clear majority, 68 per cent, are more confident about next year than this year. The research was carried out by Informa which talked to over a thousand people working for mobile operators, handset makers, equipment vendors and other mobile companies.

Informa believes the inherent contradictions of traditional mobile business models will become apparent next year. Operators subsidise handsets by as much as €400 as part of acquiring customers but churn rates are still at 30 per cent and there is continued pressure on the price of voice calls.

More than half of survey respondents expect voice call prices to fall by up to ten per cent with some 25 per cent expecting falls next year of between ten and 25 per cent. Subscriber Acquisition Costs are expected to stay at between €100 and €400.

Average Revenue Per User(Arpu) has fallen in Western Europe for the last three quarters and will continue to fall next year.

The analysts expect more growth amongst Mobile Virtual Network Operators helped by companies looking to escape the costs of subsidising handsets and in part by operators realising they can make better margins on wholesale business than retail sales.

There will be further pressure from the likes of BT, France Telecom and other old school operators trying to revive their fixed line businesses.

Voice over Internet Protocol will also start to have an impact. Informa believes some 30 per cent of mobile calls are made either from offices or home where a wireless VoIP connection could compete more cheaply.

Merger and acquisitions are likely to continue with more firms trying to gain entry to the still growing developing markets - Russia had as many new subscribers last year as the whole of Western Europe.

Attendees at the event this morning were most interested in the role of mobile content. Informa analyst Jessica Sandrin predicted more operators allowing content providers to go directly to consumers. She said the industry still needs to be truly creative about services and properly exploit the possibilities of mobile devices.

Globally Informa believes the top five growing market will account for 47 per cent of total net additions in 2006. China will grow fastest, accounting for 22 per cent of all new subscribers. India comes next with nine per cent, Russia with seven per cent, USA with six per cent and Pakistan with three per cent.

More details on Informa's annual Mobile Industry Outlook here.®

The Essential Guide to IT Transformation

More from The Register

next story
Major problems beset UK ISP filth filters: But it's OK, nobody uses them
It's almost as though pr0n was actually rather popular
Apple orders huge MOUNTAIN of 80 MILLION 'Air' iPhone 6s
Bigger, harder trouser bulges foretold for fanbois
Google Nest, ARM, Samsung pull out Thread to strangle ZigBee
But there's a flaw in Google's IP-based IoT system
Orange spent weekend spamming customers with TXTs
Zero, not infinity, is the Magic Number customers want
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
'Two-speed internet' storm turns FCC.gov into zero-speed website
Deadline for comments on net neutrality shake-up extended to Friday
Oh girl, you jus' didn't: Level 3 slaps Verizon in Netflix throttle blowup
Just hook us up to more 10Gbps ports, backbone biz yells in tit-for-tat spat
Want to beat Verizon's slow Netflix? Get a VPN
Exec finds stream speed climbs when smuggled out
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.