2007 Western European Mobile Communications & Mobile Data (tables only)

Mobile communications

Western Europe’s mobile market has shown consistent growth for several years. Average mobile penetration reached 108% by mid-2007 while sustaining subscriber growth of 8.5%. However, a slowdown in revenue growth was largely due to intensifying competition and regulatory action which led to falling prices for voice minutes, roaming and interconnection charges. Growth in coming years will primarily depend on subscribers adopting mobile data services.

Europe has been an important laboratory for 3G networks and services and for emerging technologies such as EDGE and HSCSD. Financial considerations from 2001 to 2004 hampered developments in 3G roll-outs, while 2.5G offerings such as GPRS failed to take off. An important catalyst for mobile growth since 2005 has been the rapid development of product features and new product designs. About 60% of mobile phones sold in mid-2007 had additional functionality such as cameras, while 95% of 3G phones had MP3 or similar technology on board. Built-in GPS has also become a standard feature in many phones.

During 2007, the major pan-European operators - Vodafone, O2, T-Mobile, Orange - continued with business models that focussed on broadening their footprint across both Eastern and Western European countries, as well as branching out into other growth areas such as broadband. Vodafone in particular has endeavoured to align itself as a quad-play operator by buying the networks of broadband providers in markets such as Italy and Spain where it already has a significant mobile presence. T-Mobile has also made an impact, particularly through acquisitions and licensing agreements with MVNOs. Other than these companies, the mobile subsidiaries of incumbent telcos continue to be the most important mobile operators in their respective countries across Europe.

GSM networks continue to dominate the market, with more than 80 network operators in the EU, including three to four operational in most European countries. There were also some 214 MVNOs operating in Europe in 2006, with more beginning operations each month.

Mobile penetration in Europe is so ingrained among consumers that almost 20% of users have opted to have a mobile phone only, ditching their fixed line. This figure would certainly increase substantially if mobile calls were charged at landline rates.

Mobile data

SMS still accounts for the bulk of data revenue, while less than 20% of subscribers use MMS/picture messaging and fewer still make use of mobile Internet and mobile TV despite numerous launches and promotions.

During 2007, most European mobile operators deployed or expanded EDGE and HSDPA networks in a bid to encourage consumer use of mobile broadband services and increase data ARPU. The number of content providers and the range of services on offer has expanded, making consumer involvement in mobile data a more likely proposition during the next few years. The EU suggested imposing regulatory limits on data roaming tariffs during 2008, which will dent operator revenue. This may not be all bad. Gaming, video and music portals are being progressively transferred to the mobile arena, and subscribers have become more aware of the capabilities of 3G services, but are also wary of the present high usage costs. By mid-2007, the 3G subscriber base on which mobile data growth depends approached 50 million, though providers have struggled to encourage subscribers to use services which are widely perceived as expensive and of uncertain value.

A range of potential mobile data services could be made available, including information on public transport systems, ringtones, games, directory enquiries, weather forecasts, voting services, share prices, horoscopes and logotypes. Typically, these are only provided to the operator’s own customers.

A key constraint limiting customer demand for mobile content and services has been the absence of content with sufficient drawing power to attract users onto a new platform. Ongoing work to develop gaming and handset customisation, as well as new services such as mobile video and TV services, has created a mass of content for operators such as Vodafone, Telefónica Moviles and O2. The Vodafone live! portal has become relatively popular, partly through having the scale and reach to leverage a compelling quantity of content into the service. Hutchison’s 3 has worked hard to develop similar content with media partners on a country-by-country basis.