March 22, 2013

While wireless subscriber growth remains strong, the pace of expansion has begun to slow with the market reaching saturation, according to respondents to a survey conducted by PwC US titled: Real time. The growing demand for data. 2012 North American wireless industry survey. The survey finds that the U.S. has possibly reached a level where most of the addressable market has a mobile device and service.

“The maturing mobile industry is at an inflection point with price and value conscious subscribers consuming more data services requiring continuous and significant network investments from operators,” said Pierre-Alain Sur, PwC’s global communications industry leader. “Carriers need to find the right balance of finding innovative ways to retain and attract subscribers, creating shareholder value, while investing significantly in their networks. As a result, many are turning to new growth areas such as multi-device data plans, machine-to-machine (M2M) subscriptions and greater customization of service plans for new revenue sources.”

According to the PwC survey, the average tablet connections grew nearly 43 percent year-over-year due to higher demand for mobility from businesses and consumers, better network connectivity and higher data demand. Smartphone sales to postpaid customers represented 60 percent of new device sales, up 46 percent from the 2011 survey, and accounted for 70 percent of postpaid upgrades, up 40 percent from the 2011 survey. Android was the most widely used operating system as of June 30, 2012 and comprised an average of 81 percent of prepaid subscribers and 55 percent of postpaid subscribers.

Prepaid services remained consistent from a year ago representing an average of 25 percent of total service revenues. According to the PwC survey, the lack of growth in the prepaid subscriber base is attributed to the combination of a maturing market, mobile subscriber penetration exceeding 100 percent and rebounding recessionary consumer purchasing behaviors.

The report finds the continuing trend of declining mobile voice usage as subscribers consume more data services. The average minutes of use (MOU) per postpaid subscriber decreased from 720 MOU per month in the previous survey to 673 MOU per month in the 2012 survey.

Wireless operators continue to transition to 4G technology to support the increasing demand for mobile broadband services across devices as well as to support demand for new services, such as video chat and mobile TV. In the 2012 survey, 11 of the 13 responding carriers had their own cell sites using 4G technology, compared with only five carriers responding to the 2011 survey. Furthermore, the 2012 survey indicates that on average, 65 percent of carriers’ cell sites used 4G technology, compared with 46 percent in the 2011 survey, and 60 percent of the subscriber base was covered by 4G technologies, compared with 53 percent in the 2011 survey.

The 2012 survey reveals that eight of the 12 responding carriers have plans for, or are currently in the process of decommissioning network assets. “Driven by the complexity and cost of maintaining multiple technologies, more carriers are preparing to decommission their older networks as more subscribers continue to upgrade more quickly to new devices,” said Shara Slattery, PwC partner and managing editor of the North American wireless industry survey. “Pressured to make the most of existing spectrum, network operators and equipment vendors are considering new approaches to network deployment including focusing on small cells and finding better ways to make valuable legacy assets be available for reuse.”

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