2013: the year in research
A review of our 2013 reports — the highlights you may have missed
Global financial trends
Global mobile revenue growth slows as competition bites
While mobile connection penetration continues to rise above the 100% mark across the majority of countries worldwide, global revenue growth fell from double to single digits in 2008. Mobile revenue as a share of GDP peaked in 2009 at 1.63%, and has since averaged 1.55%.
Intensifying competition has been the predominant factor impacting mobile revenue growth over the last four years. This is backed up by a reduction in the average of the Herfindahl-Hirschman Index (HHI) of mobile markets globally, down 6% over the four years ended 2012. As a result, while global mobile spend per capita stood at $161 during 2012, up 15% from $140 in 2009, it grew at a slower rate than nominal GDP per capita, which rose by 20% over the same period to reach $10,256.
This report analyses the factors that have influenced mobile revenue trends in four market segments: Discoverers, Fast Growers, Connected Players and Digital Pioneers.
Asia driving mobile revenue growth
Mobile operator revenue generated in Asia will cross the $500 billion mark this year, making it the most valuable and fastest-growing regional mobile market in the world. Asian operators generated $478 billion in revenue in 2012, an increase of 10.4% year-on-year. This means that today Asia contributes 42% of global mobile revenue - equivalent in size to the North American and European mobile markets combined.
Last year, Asia was the only global region to post double digit annual revenue growth, accounting for almost two thirds of global growth and underscoring the importance of the region in driving the global mobile market forwards.
Read more: Global mobile revenue growth shifts to Asia
'Real' ARPU levels up to twice as high as reported
Average revenue per user (ARPU) is traditionally based on mobile connections (ie SIM cards), and on this basis has been in decline in most regions over the last decade. However, when ARPU is considered on a ‘per subscriber’ (ie individual person) basis, our research shows that consumers in more than a third of countries worldwide have actually increased their spending on mobile services over the same period.
This study found that at $27 in 2011, global subscriber ARPU stands at around twice the level of connections-based ARPU ($14). In the developed world, subscriber ARPU is $55 compared to $36 for connections ARPU; in the developing world the figures stand at $16 and $7, respectively.
BRIC mobile markets more valuable than North America
Global revenue generated by mobile operators grew by 5.2% year-on-year to $1.16 trillion in 2012, driven by growth in developing economies that now account for four out of every five mobile connections worldwide. At current growth rates, we project that the developing region will overtake the developed region in terms of total mobile revenue in five years.
Just over half (51%) of revenue in the developing region was generated via operators in the BRIC countries, which surpassed North America in terms of total revenue size in 2011.
Read more: Global and regional mobile revenue trends
LTE moves into mass-market deployment phase
We expect more than 230 LTE networks to be commercially available across more than 90 countries worldwide by the end of 2013. By end of 2017, we expect that there will be close to 500 live LTE networks across 128 countries worldwide. We forecast that the number of global LTE connections will pass 1 billion in 2017, accounting for one in eight connections globally by this point. Half of the global population will be covered by LTE networks by 2017, up from 19% in 2013.
This report discusses regional LTE connection trends and discuss the key drivers and assumptions behind our LTE connection forecasts, including developments in spectrum, devices, services, network coverage and the impact that LTE has on data usage and ARPU.
2G still going strong
Despite the industry’s current focus on mobile broadband services, 69% of global mobile connections were still running on 2G networks as of Q3 2013. Our findings show that, throughout the next four years, most mobile operators expect that 2G networks will remain an important asset with some operators having "no plans to switch it off" as 2G is still needed for a number of reasons. Nevertheless, a group of pioneer operators in advanced and mature mobile markets have already taken commercial decisions to refarm 2G frequencies for 3G/LTE use, and have consequently scaled back procurement of 2G-only network hardware and devices.
In this research, we present some of the key factors that influence the lifecycle of 2G networks in both developed and developing markets.
Operators get set for M2M opportunity
Our first major M2M study found that 391 mobile operators offer M2M services across 171 countries, equivalent to four out of ten mobile operators worldwide; 31% of global M2M operators are located in Europe, 29% across Asia and Oceania, 18% in Latin America, 17% in Africa and the remainder in Northern America.
The majority (55%) of M2M operators are located in the developing region. Some 45% of mobile operators in the developed region offer M2M services, compared to 36% in the developing world.
Read more: Mobile operators’ global M2M footprint
Competition and market dynamics
Developing world dragging its heels on MNP
Only a quarter of developing markets have introduced Mobile Number Portability (MNP) to date, according to our research, while only a further 15% are known to be implementing MNP in the future. This suggests that about 60% of regulators in the developing world have either decided against introducing MNP, or have made no progress to date.
Many of the largest developing markets have already implemented MNP, including in India, Brazil, Nigeria, Turkey, Mexico and South Africa. China – the world’s largest mobile market - plans to do so in 2014. However, there is an apparent lack of enthusiasm for MNP in many markets across Asia and Africa.
Pricing and network usage
Data tariffs in price sensitive markets
Mobile broadband connections in the developing world crossed the 1 billion mark in Q3 2013, having overtaken the developed region in the previous quarter. By 2017, there will be 3 billion mobile broadband connections in the developing world, more than twice the amount in the developed world.
The range and nature of data tariffs on offer is a key factor influencing the adoption of mobile broadband services across developing economies. In this report, we examine the increasing range of prepaid and hybrid data tariffs targeted at cost-conscious populations in predominantly prepaid markets, balancing the twin goals of providing access and preserving returns on network investment.
US operators look to MVNO and M2M for connections gains
MVNO and M2M services are playing an important role in boosting US mobile operators’ quarterly connection gains, often offsetting slowing growth in traditional mobile services.
Our estimates show that the sum of MVNO and M2M connections for the six largest US operators has increased by almost 30 million between Q2 2010 and Q2 2013 to reach a total of close to 70 million. While combined total connections among them has grown by 20% over the last two years, when excluding their respective MVNO and M2M bases the level of total connections growth is approximately halved at around 12%.
Read more: M2M and MVNOs driving US connections growth
Global prepaid/contract split to remain unchanged to 2017
According to our operator prepaid/contract forecasts for 2017, we found that the global split today – 77% prepaid, 23% contract (Q1 2013) – will be strikingly similar in five years’ time at 76% prepaid, 24% contract in Q4 2017. This suggests that growth in prepaid as a proportion of total connections has now plateaued, having increased steadily from around a third at the turn of the century to more than three quarters now.
Contract-based connections are expected to increase slightly across all global regions with the notable exception of the Americas – where prepaid is still growing steadily in the US.
Smartphones make up 58% of device mix; one in six powered by 4G
In this study in April 2013 we analysed a sample of more than 50 operators in developed markets that had commercially launched 4G LTE by Q1 2013. We tracked both the number and type of devices offered by these operators, and the wireless technology standard supported on each device.
The research found that 58% of all devices offered by mobile operators in the sample were smartphones, whereas 23% were data devices and 19% were basic/feature phones. On average, an operator device portfolio comprised 37 smartphones, 14 basic/feature phones, seven tablets, four dongles and three hotspots; 3G accounted for 70% of all devices tracked in the study, with devices that also support 4G making up 15% and 2G-only devices accounting for just 15%.