August 20, 2006

'Can you hear me now...or read my message or search the Web or watch the news?'

eMarketer projects that 297 million Americans will have a mobile phone by the end of 2009, up from 208 million in 2005, representing over 92% of the country's population.

At the same time, fierce competition for mobile voice users in the US is hitting carriers' revenues, and that decline is expected to continue. Many wireless service providers are hoping that new non-voice revenues will fill the gap.

"Despite carriers' desires to increase non-voice spending, revenues from mobile voice service will continue to dwarf non-voice revenues for the next few years at least," says James Belcher, eMarketer senior analyst and author of the new Mobile Spending: US Non-Voice Services report. "Total wireless revenues in the US for 2005 were $119 billion. eMarketer projects US mobile data revenues in 2006 will be less than $24 annually from each of the 228.7 million Americans who will be using mobile phones. $5.4 billion is not enough to shore up revenue growth for the carriers."

"By contrast," says Mr. Belcher, "eMarketer's projection for US mobile data revenues of $37.5 billion in 2010 may begin to be enough to offset falling voice revenues."

Messaging will account for roughly half of non-voice revenues in the US in 2009, according to Yankee Group, with texting accounting for the greatest portion of messaging revenues, at $2.7 billion.

In addition, the researcher projects that the market for ringtones, other music and audio should reach $1.7 billion by 2009.

The situation is different in other parts of the world.

"In advanced markets in Asia, half or more of all mobile phone users use (and pay for) data services on their phones," says Mr. Belcher. "And they are not merely buying ringtones, but a range of goods and services including real-world goods â€" actual physical products paid for with mobile phones instead of cash or credit cards, and picked up in person at convenience stores."

So what is holding up the growth of mobile data sales in the US?

"Perhaps the single most significant problem is the 'walled garden' approach that has each carrier creating separate and mutually incompatible platforms for the sale and distribution of non-voice services," explains Mr. Belcher. "As a result, despite similar offerings, each carrier has its own system for selling games, music and other applications. These systems are good at enforcing customer loyalty, but bad at creating growth."

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