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Aug 15

Data will be 65% of Total U.S. Mobile Revenue by 2016

Data revenue will grow to 65 percent of total U.S. wireless service revenue as voice declines to 35 percent in 2016, according to Hugues de la Vergne, principal research analyst at Gartner.

What might not yet be so clear is how the industry will get to that point. Growing adoption of smart phones, with the new and significant data plan revenue, will play a key role, of course. Almost by definition, a smart phone activation will come with a boost in monthly revenue, from data access, of $20 to $40 a month.

But different retail packaging likely will play a key role. New shared data plans offered by AT&T and Verizon Wireless are intended to lift overall revenues while creating a usage-based data revenue model, while encouraging users to add tablets to their accounts for mobile broadband access.

What remains unclear is the extent of demand for such plans. Some think the entire industry eventually will move in that direction, as was the case with some earlier packaging innovations, including the mobile industry's abolition of domestic long distance with AT&T's Digital One Rate, or the adoption of family plans for domestic voice and texting.

But that is far from a universal view. T-Mobile USA, for example, has argued that the plans are not advantageous for consumers. And there are many subtleties. Most believe that the new plans primarily will encourage smart phone adoption, and secondarily tablet mobile connections.

Some of us might argue it is possible that the big secondary effect will be to lift personal mobile hotspot service sales, not the additional mobile network connections for tablets. The reason is that a personal mobile hotspot capability solves the same problem as a paid mobile connection for a tablet, and also has additional value.

When the personal hotspot capability is provided by the smart phone, there is no need to carry another device, such as a dongle or discrete hotspot device. Also, the personal hotspot conveniently can connect multiple devices, where a dongle connects only one device.

But that isn’t the only potential way data revenues might grow. As the number of devices with mobile network modems increases, so will the number of instances where it makes sense to have mobile network broadband.

The issue is whether that also will lead to demand for multi-device data rate plans, as Gartner believes.

The disagreement about adoption probably will not be decided, one way or the other, for some time. The reason is that the current structure of the shared data plans does not offer significantly better economics for users, compared to what they already can buy.

There are some marginal advantages and inducements to add tablet devices, for example, but the price advantage might not be so obvious to most users, or valuable.

But Gartner believes multi-device rate plans will be a key driving factor in the expansion of U.S. data revenue from $81.4 billion in 2011 to $151.9 billion in 2016.

Source: Carrier Evolution