We are continually being told about the importance of data services for mobile operators as the source of future growth in their business, but figures from research company Wireless Intelligence would suggest that, for the MNOs of Europe at least, the day when data services make up the majority of their sales is still some way off. Average revenue per user (ARPU) for operators across the EU’s 27 member states has dropped by 20% over the last three years, according to the firm’s findings. This precipitous decline is largely due to falling voice revenue in the face of tighter competition – as well as regulatory intervention in the area of tariffs.
Combined European mobile ARPU from all sources was an average of €20 in 2010, a figure down from €25 for 2007. Revenue from non-voice sources, in other words from mobile data services combined with messaging, has apparently helped to make this statistic somewhat less grim than it is. But the ideal world where rising data revenue easily accounts for, and indeed significantly outstrips, the drop in voice revenue is just not in sight yet. On average, across the EU, mobile data accounts for double the proportion of ARPU it did three years ago. This is not, however, filling the hole as it stands. To put some international perspective on it, Vodafone’s revenue from nonvoice sources, taken from its four largest European markets of Germany, Italy, Spain and the UK, accounted last year for around 33% of total service revenue. The figure for other European operators is comparable. Japan’s Softbank, on the other hand, took 54% of revenue from non-voice in the same period, with NTT DoCoMo managing 49% and KDDI 45%. All being equal, it will take Europe’s mobile operators another five years at current rates of non-voice sales growth to hit 50% or more of overall revenue.
To create the sort of mobile data services that buyers want to pay for will require large investment on improvements to network quality. Mobile operators will need to be extremely careful in how they balance this need to invest with the pressure to remain competitive. Many will look to share assets, while others will be praying for the sort of market consolidation that appears to be hitting the US mobile sector with the prospective deal between AT&T and T-Mobile. Consideration will need to be given by all mobile players to the sourcing of the partners that provide allimportant backhaul support for rising tides of mobile traffic.
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