Mobile Data Services – Unlocking Revenue Streams in Europe
Mobile data services will be the main source of revenue growth in Central and Eastern Europe (CEE) over the next five years says a new report from Analysys Research. With rising mobile penetration across the region and voice ARPU levels in gradual decline, operators must turn their attention to non-voice services. Analysys forecasts that non-voice ARPU will grow from EUR1.8 in 2006 to EUR3.3 in 2012 – an annual growth rate in excess of 10%.
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Non-voice ARPU and non-voice services as a percentage of total ARPU in CEE, 2002–12
The increasing importance of non-voice services is reflected in the fact that non-voice ARPU is forecast to rise from 17% to 26% of total ARPU over the same period.
Mobile penetration in CEE lags behind that in Western Europe (although there are variations among individual countries), and the ARPU generated from mobile data in CEE shows more similarities to the levels achieved in less developed markets. Non-voice ARPU in CEE has been falling in absolute terms in recent years, primarily due to a reduction in revenue from person-to-person (P2P) messaging, to which SMS is currently the largest contributor. As newer services, such as MMS, email and mobile instant messaging, gain a foothold, revenue from P2P messaging is set to increase and could deliver over 10% of total ARPU by 2012.
Despite a tendency for subscribers to continue to use basic 2G and 2.5G technologies, there is potential for growth in revenue from mobile data services in CEE markets. Underdeveloped fixed broadband markets in most countries provide an opportunity for mobile operators to promote their data services aggressively. The deployment of 3G and 3.5G networks across the region underpins this strategic approach; mobile operators have launched at least one such network in each of the markets covered in Analysys's report. Although many mobile operators offer HSDPA-enabled handsets, the Nokia N95 being one of the most popular, the main focus is on the provision of datacard services.
The key to leveraging opportunities is the ability of mobile operators to provide the necessary level of network coverage (and good-quality indoor coverage), especially in areas with no fixed broadband equivalent. Timing is critical, as mobile operators must act quickly before the fixed broadband market matures. In the longer term, the rise of fixed broadband technologies will leave very limited opportunities for mobile broadband, which will primarily be a service targeted at enterprise users who require mobility.
The pricing strategy that an operator chooses to adopt for mobile data will be of paramount importance for unlocking the market. With mobile data forecast to make up a 16% share of total ARPU in CEE by 2012, double its current level, pricing is critical in achieving this rapid growth. In fixed telecoms, data access is becoming a commodity business, because of the widespread availability of low-price and unlimited usage tariffs. In order to compete more effectively with fixed broadband and meet rising consumer expectations of Internet access services, mobile operators are shifting their attention to flat-rate pricing.
If they are to realise the revenue opportunity, operators will need to strike a fine balance between offering unlimited data packages and avoiding the risk of cannibalising potential revenue streams from mobile data.
Posted to the site on 30th November 2007
