2007 Australia - Mobile Data and Content - The long wait for 4G

Mobile data as it has been promoted to the market through portals with proprietary content continues to be more hype than reality; Premium SMS has been more successful than On-Deck services from the operators. All the announcements about mobile content, mobile payments and mobile TV largely relate to future developments. We don’t see any of these services reaching mass market potential until 2010-2012. The happy ‘quadropoly’ has very little incentive to cannibalise its lucrative voice services. Voice and SMS combined keep on generating well over 90% of all mobile revenues. For more information, see chapter 1, page 1.

The key problem is still the business models. As soon as true, affordable mobile data is made available voice and SMS will be cannibalised by mobile email, as has happened in Japan. Furthermore, the current technologies and available spectrum is also making mass market use of mobile data problematic. For the time being the operators will keep the costs high for their mobile data services, limiting the market to business users, professionals and the top end of the consumer market. At the same time plain data traffic is increasing at very fast rates, fuelled by the capped prices. This will rapidly change the content business model to Off-Deck where users will look for content directly on the Internet, bypassing the operators and the PSMS companies. For more information, see chapters 2.1, page 12 and chapter 2.2, page 19.

That is not to say that the future is not in mobile content and other mobile data services. It certainly will be. The issue is the slow pace at which the market is moving forward. Once true mobile data services become available and affordable we will see the machine-to-machine market easily outstripping the human subscribers. Once wireless broadband capacity has become a commodity technologies such as RFID, location-based services and telemetry will explode onto the scene, but again this is still some years away. For more information, see chapters 9, page 86, chapter 10, page 88 and chapter 11, page 97.

For the moment, however, the operators will protect their lucrative, proprietary SMS services for as long as possible. Growth in SMS continues, but at a slower rate, and price pressure has put a strain on revenue growth. MMS has never really taken off and it will also be some years before mobile TV begins to generate any significant revenues. For more information, see chapter 3, page 29.

The mobile content market remains dominated by ringtones and wallpaper, with music coming in a distant third. Mobile email is by far the most used application among business users; thanks to a range of new smart phone devices this market has seen significant growth. Beyond these markets, most mobile content providers have given up and mobile marketing is expected to decline, due to a lack of real business opportunities in a market controlled by the operators. For more information, see chapter 7, page 60.

Key Highlights

• Opportunities in mobile data remain limited to ringtones and wallpaper and some music - these three, combined, account for revenues worth close to $500 million.
• HSDPA services are priced beyond market affordability.
• The operators want to prevent a move from proprietary voice and SMS to open mobile email services.
• Mobile data revenues are limited to less than 5% of total mobile revenues.
• SMS remains a lucrative market, worth over $1.5 billion. It is expected that in 2008 over 10 billion SMS messages will be sent.
• Mobile TV will never take off. Video-based services over wireless broadband, however, will present excellent business opportunities after 2010-2012.
• The premium SMS market remains interesting and is dominated by overseas players.
• Both HSPA and WiMAX are contesting the wireless broadband market. While the advantage of HSPA is that the technology is available, operators are reluctant to make use of this advantage.
• Commercial WiMAX is still two years away. The deployment of WiMAX by OPEL will certainly start shedding some light on its viability.

Further information provided:

• Up-to-date overviews of the market and the industry as at mid-2007.
• Statistics on revenues, subscribers, ARPU and market shares.
• Separation of industry hype from market reality.
• Analysis of the infrastructure developments such as HSDPA and WiMAX, including future directions.
• Key players in the market – analysis and comments.
• Overviews of operators, content providers and Premium SMS operators.
• Business analysis and overviews of the various 2G and 3G technologies.
• Analysis of trends and developments in pricing, substitution and FMC.

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