European mobile growth stagnates at 300 million

ITworld.com |  Tech & society, Tech & society

Mobile subscriber growth in Western Europe will stagnate at around 300 million customers, according to a new report published Thursday by the consultancy Analysys Ltd.

Stagnation comes as mobile operators literally run out of new customers to sell phones: Western Europe has a total population of around 350 million, not all of whom are old enough to use a mobile phone. Some countries, notably Finland, already have over 80 percent mobile penetration.

For this year, Analysys forecasts a mobile growth of 6 percent, down significantly from the 17 percent growth rate achieved last year and the 53 percent growth rate in 2000.

Subscribers' numbers grew less than 3 percent in the first six months of 2002, with Germany -- Europe's largest mobile market -- showing hardly any increase, according to Analysys, headquartered in Cambridge, England.

Mobile operators are beginning to compensate for the slow subscription growth by improving ARPU (average revenue per user) levels, according to the consultancy. Germany's E-Plus Mobilfunk GmbH & Co. KG was among the operators showing the greatest improvement in ARPU so far this year, it said. The German and British mobile subsidiaries of MMO2 PLC of the U.K., Orange Personal Communications Services Ltd., Sweden's Telia AB and Italy's Telecom Italia Mobile SA also showed signs of reversing the long-term decline in ARPU, according to Analysys.

The ARPU turn-around is linked in large part to the growth in revenues from non-voice services. Over the past five months, several European operators have launched new mobile data services, such as MMS (Multimedia Messaging Service), and new camera phones that enable users to take and send photos.

Analysys projects Western European operators to earn 13 percent of their revenue from non-voice services this year, compared to 8.8 percent in 2001 and 5.3 percent in 2000.

The report, however, warns operators to avoid repeating mistakes they made with new mobile data services, such as WAP (Wireless Application Protocol) and GPRS (General Packet Radio Service). Both of these services, it said, were hindered by a lack of complete service packages, which must include not only the basic technology, but also attractive devices, reliable networks, appropriate pricing, strong marketing and easy-to-use services. The services, the report added, need to be either fun or make users highly productive.

In addition, Analysys urges mobile operators to embrace new public WLAN (wireless LAN) services to maximize future revenue streams. Operators could lose between 3 percent and 10 percent of mobile non-voice revenues if they ignore WLAN opportunities, it warned.

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