2007 Western European Mobile Communications

This European market report covers developments in the region’s mobile communications market in 2007. The sector has undergone enormous changes in response to regulatory pressure on roaming and interconnection tariffs, competition from numerous new start-up MVNOs, and pressure on voice tariffs and bundled SMS offers which have lowered voice and data ARPU. Revenue growth in coming years will primary depend on the continued increase in subscriber numbers and the use of multiple SIMs, 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 will be overcome as operators introduce flat-rate charging models. The report presents the latest statistics for Europe’s key mobile market, including an assessment of emerging technologies and consumer trends. An overview of operators and national market conditions provides the necessary background to evaluate how this important market will progress to the end of the decade. The report includes the following markets, among others:

Austria

Austria has one of the highest mobile penetration rates in Europe. The country’s subscriber base is fiercely contested by network operators and a growing number of MVNOs, with the result that Austrians have some of Europe’s lowest tariffs. The four 3G networks have seen impressive growth, largely at the expense of existing GSM offerings. Mobile penetration reached 115% by mid-2007, higher than the EU average. In addition, GSM and 3G network services have replaced analogue networks ahead of government schedule. For the country overview, see chapter 2, page 26.

Finland

Finland has one of the more mature mobile markets in Europe, with penetration rates above the EU average. In 2007 consumers benefited from the lowest mobile call charges in Europe, while 3G services were also among the cheapest. Fierce competition and a tough regulatory environment have made it difficult for mobile operators to increase revenue, and so they have focussed on mobile data services delivered via an excellent HSDPA infrastructure. Digita Oy was licensed to build a 450MHz digital mobile network in 2005 to provide wireless broadband data to sparsely populated areas, based on OFDM technology, a world first. In December 2007 TeliaSonera Finland launched broadband services on Digita’s @450 mobile broadband network. The number of fixed line subscriptions has fallen since 1998 while fixed-mobile substitution is growing steadily. For the country overview, see chapter 5, page 53.

Germany

The German mobile market is the largest in Europe, supported by an affluent population ready to adopt new technologies. 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: by 2007 there were more than 120 mobile service providers. ARPU has been affected across the board by the 11% fall in the average price for mobile communications between 2006 and 2007. The regulator in May 2007 opened proceedings for awarding spectrum in the bands 1.8GHz, 2GHz and 2.6GHz for digital mobile communications during 2008. Fixed-Mobile Convergence from O2’s Genion Homezone service and Vodafone’s ZuHause have become popular, though T-Mobile cancelled its mobile@home service in March 2007 after it failed to take off. For the country overview, see chapter 7, page 76.

Italy

Italy has one of Europe’s most vibrant mobile markets, supported by a large population keen to try new services. Mobile penetration is far above the European average, partly due to the common use of multiple SIMs. The market is dominated by three operators, while a fourth, 3 Italia, has struggled to make a profit or significantly expand its customer base. All four providers operate 3G networks, while investments in network upgrades have provided rich opportunities for mobile data use among consumers. Despite market saturation mobile take-up continued to be strong in 2007, at about 12%. In 2004, only 4.2% of mobile subscribers in Italy used 3G technology, but by mid-2007 this had increased to 24%, one of the highest proportions in Europe. The regulator estimated that there would be about 25 million 3G users by the end of 2007. For the country overview, see chapter 10, page 107.

Spain

Spain is one of the major mobile markets in Europe, underwritten by a population of 44 million. Competition between the three main players has helped to drive down the cost of services, while at the end of 2006 the first MVNOs were launched which promise too intensify competition further. The 3G market also saw great changes in 2007 with the launch of services from Xfera’s Yoigo brand: Yoigo reached about 350,000 subscribers by the end of 2007. For the country overview, see chapter 16, page 154.

Sweden

Sweden has been an innovator in the mobile sector, and was the first country in Europe to have UMTS networks across all major operators. Slower subscriber growth in recent years, due to market saturation, has been enervated by greater consumer take-up for mobile data services, made possible by significant investments in HSDPA networks. The analogue network was shut down in mid-2007, while the 450MHz frequency has been switched to digital use to provide a national mobile broadband service. Strong competition among network operators has lead to falling call prices and ARPU, not yet compensated for by data use. The digital 450MHz network operated by Nordisk Mobiltelefon provided 80% geographic coverage by July 2007. For the country overview, see chapter 17, page 166.

The UK

The UK 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. The market in 2007 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. Mobile penetration reached 117% by mid-2007, yet subscriber growth remains strong as consumers adopt additional SIMS and business-oriented devices such as the BlackBerry. For the country overview, see chapter 19, page 187.

Data in this report is the latest available at the time of preparation and may not be for the current year.