2006-2007 Western European Mobile Communications Market

2006-2007 Western European Mobile Communications Market

This annual report offers the latest data, statistics and analysis on the Mobile communications market in Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Malta, The Netherlands, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. Subjects include:

Trends, Analyses, Players, Revenues, Subscribers, Prepaid;
Spectrum Auctions and Licenses, Developments, National Policies;
Infrastructure, GSM, CDMA, 3G;
Mobile Data Markets - SMS, MMS, GRPS, EDGE, WAP;
Developments in HSDPA, HSCSD;
BlackBerry, i-mode and Vodafone live! services;
Location-Based Services; Push-to-Talk;
Mobile Satellite Services, Mobile TV, DVB-H.

Executive Summary

This European market report covers developments in the region’s mobile communications market, which has grown strongly despite market saturation. Growth in coming years will primary depend on the continued increase in subscriber numbers and use of multiple SIMs bolstering falling voice and data ARPU, and by the further adoption of rich-media services including music downloads and mobile TV. The 3G subscriber base has shown extraordinary growth and in coming years it is expected that consumer reticence to use services offered will be overcome as operators develop more sympathetic business models and price structures. Regulatory controls on roaming and interconnection tariffs will further encourage mobile use during 2007 and beyond. The report presents the latest statistics for the mobile market in this crucial region, so much a laboratory for emerging technologies and consumer trends. An overview of operators, national markets and trends provides the necessary background to an assessment of how this important market will progress to the end of the decade. The report includes the following markets, among others:

Austria
Austria’s mobile market grew by about 9% during 2006 despite having one of the highest mobile penetration rates in Europe. The country’s subscriber base is fiercely contested by five network operators and a growing number of MVNOs, with the result that Austrians have some of Europe’s lowest tariffs. The development of mobile revenue has been dynamic since 1997, reaching an estimated €4 billion in 2006, though revenue growth has slowed as the market has matured. Operators have attempted to reverse the trend by promoting contract over prepaid cards and exploiting mobile data to offset declining voice revenue.

Finland
Finland has one of the most mature mobile markets in Europe, with overall penetration rates in 2006 above the EU average. Annualised growth continues to be strong, while fierce competition and a tough regulatory environment have created a difficult market for mobile operators, struggling with the third lowest mobile call charges in Europe. The mobile market largely developed through the duopoly of TeliaSonera and Elisa; several service providers operate on the three national networks, while some MVNOs also add to the mix, acting as independent network operators. The market developed significantly after Mobile Number Portability was implemented in 2003, together with price competition which brought free on-net calls. Almost half of Finns have replaced their fixed line connection with mobile telephony.

Germany
The German mobile market is the largest in Europe, and with strong growth in 2006 the country’s mobile penetration rate is rapidly catching up with the EU average. The market is dominated by four main operators but there is increasingly lively activity from MVNOs and resellers which has fuelled competition and placed pressure on tariffs, resulting in lower ARPU. As a result, operators have fast-tracked development of data-rich applications to improve profit margins. The number of 3G users contributed about 70% to the overall growth in user numbers in 2006. Several ‘no frills’ discount prepaid offerings have entered the market, putting pressure on operator ARPU and resulting in the average price for mobile communications being pushed down by some 12% during 2006. The leading mobile operators in Germany can expect further competition from the fourth-ranked player O2 in 2007 following its takeover by the Spanish incumbent Telefónica Móviles. Furthermore, Telefónica’s commitment to the i-Mode portal should see the company promote 3G and catch up with the subscriber base of the more established operators.

Italy
Italy has one of the largest mobile phone markets in Europe, both in terms of penetration and market revenue. Despite evident market saturation, mobile take-up continued to be strong in 2006 and was likely to continue to grow in 2007 given the popularity of using multiple SIMs. In 2004, only 4.2% of mobile subscribers in Italy used 3G technology, but by June 2006 this had increased to 19%, one of the highest proportions in Europe. Growth is expected to be similarly strong to the end of the decade as lower prices, improved handsets and greater consumer awareness of 3G capabilities combine with consumer-driven content.

Spain
Spain is one of the major mobile markets in Europe, underwritten by a large population. Strong growth in 2007 is expected on the back of competition between the three main players, which has driven down the cost of services. The market saw some major changes in 2006. Orange has been able to exploit the resources of its parent company France Telecom to secure the lion’s share of net adds and overtake Vodafone as the number two player. After considerable delays the MVNO market was opened in October 2006, and the emergence of a number of licensed operators in 2007 promises too intensify competition further. The 3G market will also see greater changes in 2007 with the launch of services from Xfera. Growth in traffic minutes was stronger than subscriber growth, partly as a result of lower call prices, and this was largely responsible for supporting operator income and compensating for a 12% cut in mobile termination prices ordered by the regulator. Spain also has the highest number of ported mobile numbers in Europe.

Sweden
Sweden’s small mobile market remains one of the most advanced in Europe, with a broad range of data services available. The country was the first in Europe to have an operational UMTS network across all major providers. Market saturation has stabilised growth in recent years, but the popularity of prepaid cards, representing more than half of all customers, has helped to push penetration levels far above the EU average. The single analogue network run by Telia is winding down, while four GSM networks are licensed. Competition is strong, particularly between Telia and Tele2, while MVNOs have a stable presence. This competitive market has led to falling prices in mobile calls since 2004, with a consequent increase in voice minutes, a trend which is likely to continue into 2007.

The UK
The UK mobile market in 2006 was characterised by new developments in advanced data services such as mobile TV, the bundling of mobile as a quad-play service, and regulatory controls on charges and fees. The country has one of the largest mobile markets in Europe, served by five major providers which have all launched 3G services, as well as by a growing number of low-cost MVNOs. Subscriber growth is strong despite the high penetration rate. Fierce competition has forced operators to concentrate on packaging service bundles and line service promotions. ARPU was stable for all operators during 2006, encouraging them to plug data services and branch into fixed-network operations such as broadband. Take-up of 3G services was initially slow, but successful marketing strategies by 3G providers and improvements to the quality of 3G-enabled handsets saw take-up increase rapidly in 2006. Although 3G represented only about 10% of all mobile subscribers in early 2007, and most of these still used their handsets only for voice and SMS, take-up is expected to grow strongly to the end of the decade as improved and cheaper 3G data applications become available.

This annual report offers the latest data, statistics and analysis on the Mobile communications market in Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Malta, The Netherlands, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. Subjects include:

Trends, Analyses, Players, Revenues, Subscribers, Prepaid;
Spectrum Auctions and Licenses, Developments, National Policies;
Infrastructure, GSM, CDMA, 3G;
Mobile Data Markets - SMS, MMS, GRPS, EDGE, WAP;
Developments in HSDPA, HSCSD;
BlackBerry, i-mode and Vodafone live! services;
Location-Based Services; Push-to-Talk;
Mobile Satellite Services, Mobile TV, DVB-H.

Executive Summary

This European market report covers developments in the region’s mobile communications market, which has grown strongly despite market saturation. Growth in coming years will primary depend on the continued increase in subscriber numbers and use of multiple SIMs bolstering falling voice and data ARPU, and by the further adoption of rich-media services including music downloads and mobile TV. The 3G subscriber base has shown extraordinary growth and in coming years it is expected that consumer reticence to use services offered will be overcome as operators develop more sympathetic business models and price structures. Regulatory controls on roaming and interconnection tariffs will further encourage mobile use during 2007 and beyond. The report presents the latest statistics for the mobile market in this crucial region, so much a laboratory for emerging technologies and consumer trends. An overview of operators, national markets and trends provides the necessary background to an assessment of how this important market will progress to the end of the decade. The report includes the following markets, among others:

Austria
Austria’s mobile market grew by about 9% during 2006 despite having one of the highest mobile penetration rates in Europe. The country’s subscriber base is fiercely contested by five network operators and a growing number of MVNOs, with the result that Austrians have some of Europe’s lowest tariffs. The development of mobile revenue has been dynamic since 1997, reaching an estimated €4 billion in 2006, though revenue growth has slowed as the market has matured. Operators have attempted to reverse the trend by promoting contract over prepaid cards and exploiting mobile data to offset declining voice revenue.

Finland
Finland has one of the most mature mobile markets in Europe, with overall penetration rates in 2006 above the EU average. Annualised growth continues to be strong, while fierce competition and a tough regulatory environment have created a difficult market for mobile operators, struggling with the third lowest mobile call charges in Europe. The mobile market largely developed through the duopoly of TeliaSonera and Elisa; several service providers operate on the three national networks, while some MVNOs also add to the mix, acting as independent network operators. The market developed significantly after Mobile Number Portability was implemented in 2003, together with price competition which brought free on-net calls. Almost half of Finns have replaced their fixed line connection with mobile telephony.

Germany
The German mobile market is the largest in Europe, and with strong growth in 2006 the country’s mobile penetration rate is rapidly catching up with the EU average. The market is dominated by four main operators but there is increasingly lively activity from MVNOs and resellers which has fuelled competition and placed pressure on tariffs, resulting in lower ARPU. As a result, operators have fast-tracked development of data-rich applications to improve profit margins. The number of 3G users contributed about 70% to the overall growth in user numbers in 2006. Several ‘no frills’ discount prepaid offerings have entered the market, putting pressure on operator ARPU and resulting in the average price for mobile communications being pushed down by some 12% during 2006. The leading mobile operators in Germany can expect further competition from the fourth-ranked player O2 in 2007 following its takeover by the Spanish incumbent Telefónica Móviles. Furthermore, Telefónica’s commitment to the i-Mode portal should see the company promote 3G and catch up with the subscriber base of the more established operators.

Italy
Italy has one of the largest mobile phone markets in Europe, both in terms of penetration and market revenue. Despite evident market saturation, mobile take-up continued to be strong in 2006 and was likely to continue to grow in 2007 given the popularity of using multiple SIMs. In 2004, only 4.2% of mobile subscribers in Italy used 3G technology, but by June 2006 this had increased to 19%, one of the highest proportions in Europe. Growth is expected to be similarly strong to the end of the decade as lower prices, improved handsets and greater consumer awareness of 3G capabilities combine with consumer-driven content.

Spain
Spain is one of the major mobile markets in Europe, underwritten by a large population. Strong growth in 2007 is expected on the back of competition between the three main players, which has driven down the cost of services. The market saw some major changes in 2006. Orange has been able to exploit the resources of its parent company France Telecom to secure the lion’s share of net adds and overtake Vodafone as the number two player. After considerable delays the MVNO market was opened in October 2006, and the emergence of a number of licensed operators in 2007 promises too intensify competition further. The 3G market will also see greater changes in 2007 with the launch of services from Xfera. Growth in traffic minutes was stronger than subscriber growth, partly as a result of lower call prices, and this was largely responsible for supporting operator income and compensating for a 12% cut in mobile termination prices ordered by the regulator. Spain also has the highest number of ported mobile numbers in Europe.

Sweden
Sweden’s small mobile market remains one of the most advanced in Europe, with a broad range of data services available. The country was the first in Europe to have an operational UMTS network across all major providers. Market saturation has stabilised growth in recent years, but the popularity of prepaid cards, representing more than half of all customers, has helped to push penetration levels far above the EU average. The single analogue network run by Telia is winding down, while four GSM networks are licensed. Competition is strong, particularly between Telia and Tele2, while MVNOs have a stable presence. This competitive market has led to falling prices in mobile calls since 2004, with a consequent increase in voice minutes, a trend which is likely to continue into 2007.

The UK
The UK mobile market in 2006 was characterised by new developments in advanced data services such as mobile TV, the bundling of mobile as a quad-play service, and regulatory controls on charges and fees. The country has one of the largest mobile markets in Europe, served by five major providers which have all launched 3G services, as well as by a growing number of low-cost MVNOs. Subscriber growth is strong despite the high penetration rate. Fierce competition has forced operators to concentrate on packaging service bundles and line service promotions. ARPU was stable for all operators during 2006, encouraging them to plug data services and branch into fixed-network operations such as broadband. Take-up of 3G services was initially slow, but successful marketing strategies by 3G providers and improvements to the quality of 3G-enabled handsets saw take-up increase rapidly in 2006. Although 3G represented only about 10% of all mobile subscribers in early 2007, and most of these still used their handsets only for voice and SMS, take-up is expected to grow strongly to the end of the decade as improved and cheaper 3G data applications become available.