Mobile broadband revenues will explode over the next five years as mobile broadband users are projected to total 2 billion by 2014, says IT research firm Ovum.
IT research firm Ovum is projecting that mobile broadband revenues will explode over the next five years as the number of mobile broadband users climbs to 2 billion by 2014.
Ovum's latest report on mobile broadband adoption predicts that mobile broadband revenues will grow to $137 billion in 2014, an increase of roughly 450% from their total in 2008. The major driver behind this growth will be an explosion in mobile broadband adoption, as total mobile broadband users – which Ovum defines as users of either 3G or 4G mobile data technologies – are expected to grow by over 1,000% over the next five years.
Ovum says the majority of growth in mobile data services will come from the adoption of 3G and 4G handsets, as the firm estimates that the number of mobile broadband handset users will grow from 158 million in 2008 to nearly 1.8 billion in 2014. An additional 258 million users will connect to mobile broadband services through laptops within the next five years, the firm says.
Key drivers for the growth in mobile broadband will come from big developing countries such as India and China, where Ovum says that a lack of fixed line access will drive millions of people to seek mobile Web access. In China, for instance, Ovum predicts that there will be 325 million mobile broadband handset subscribers and 52.5 million mobile broadband laptop subscribers.
However, the firm cautions that this huge increase in mobile broadband adoption will also lead to a drastic decrease in carriers' average revenue generated per user (ARPU), as total revenues are projected to grow at just 44% of the rate of total users. Ovum says there are several factors that will lower ARPU for carriers, including less revenue being generated from emerging markets, the possible introduction of prepaid tariffs used to drive broadband adoption, and increased competition for mobile broadband access.
Ovum analyst Michele Mackenzie says this is creating a dilemma for carriers who could see their profitability decrease unless they come up with new ways to make money other than delivering data.
"Several operators have touted the idea of plugging the ARPU decline with value-added services," she says. "Yet we are yet to see anything sufficiently compelling in either the handset or the laptop space."
Ovum's research in the past has been high on the potential growth of mobile broadband services. In a study published last November, Ovum projected that wireless connections worldwide would grow by an estimated 6.3% in 2009 over 2008, with particularly strong growth in the United States and Canada. The major driver in continued growth in the North American mobile market is the fact that North American countries still have relatively low rates of mobile penetration, with the United States (85%) and Canada (60%) trailing behind several countries in East Asia and Western Europe, Ovum said.