New Services Mean New Revenue for Wireless in Europe

The introduction of new mobile applications and services will increase average revenue per user (ARPUs) sometime between 2003 and 2005, reversing the current trend, according to a study The Strategis Group.

New European wireless data revenue streams will grow 1,366 percent during the next eight years, increasing from $9 billion in 2000.

“The decline in average voice revenue per user has been an established trend for several years now. However, to turn that situation around, operators have been investing significantly in next generation infrastructure and licenses,” said Zoe Slennett, senior analyst with The Strategis Group.

In its study, The Strategis Group profiles 40 European markets. Britain, for instance, will experience a decline in ARPU until 2003. However, by 2007, ARPU in Britain will surpass current levels. Subscribers’ demand for new services will remain very strong and represents a huge opportunity for mobile operators. However, delays to planned 3G handset launches will likely result delay the return of revenue growth.

“Despite investment community jitters, the mobile communications industry can reassert itself as a high-growth investment engine with a mix of useful and entertaining mobile Internet applications, services, handsets and prices. NTT’s I-mode has shown us the potential,” said Jake Saunders, European Director.

Voice services will remain a substantial revenue generator for operators. By 2008, The Strategis Group forecasts that aggregate mobile voice revenues will reach $157 billion for Europe, which is about 54 percent of worldwide revenue.

Demand for messaging services, particularly short-text message services (SMS), will continue to grow. The Strategis Group forecasts that a suite of services (including picture messaging, email and multimedia services [MMS}), will generate nearly $58 billion by 2008, second only to voice revenue.

“E-mail and picture messaging are services that subscribers can readily adapt to the mobile environment,” said Diane de Polignac, analyst with The Strategis Group. “The youth market will be among the first adopters of MMS allowing mobile operators to differentiate their offerings with rich content-based services.”

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