The US was the first market in the world to have annual mobile data revenues in excess of $100 billion – $108 billion in 2014 – but intense competition among operators saw a sharp rise in industry opex, falling ARPU and only a modest increase in EBITDA.
These are some of the findings from a report by Chetan Sharma Consulting examining US mobile market trends during full-year 2014 and Q4.
The consultancy is confident that there’s plenty more room for mobile data growth, forecasting service revenue from this segment to increase by 22 per cent, to $132 billion, in 2015.
Verizon Wireless, anticipated Chetan Sharma, will become the first operator to generate more than $50 billion from data services in 2015.
Both Verizon Wireless and AT&T accounted for 70 per cent of the mobile data services revenue during Q4, and had 68 per cent of the subscription base.
The mobile data boom is illustrated starkly by the fact that average mobile data consumption (cellular) per user crossed 2GB per month in 2014 in the US, which is a significant milestone. While it took about 20 years to reach the 1GB per month mark in the US, Chetan Sharma pointed out that the second GB was reached in less than a year.
An entire year’s worth of mobile data traffic in 2007, said the consulting firm, is now reached in less than 100 hours.
Rapid data growth, spurred on by the introduction of new devices, network upgrades and application enhancements, is nonetheless putting a strain on operators as price competition increases.
From 2010 to 2013, observes Chetan Sharma, data pricing declined by single digits year-on-year. In the first nine months of 2014, however, data pricing plummeted by 77 per cent. “It is having an impact on the industry financials which might help clear the way to further M&A in the US market,” wrote the report authors.
The bigger picture
While the overall US market was found to grow 21 per cent in 2014, to almost $400 billion, it is perhaps no surprise that voice revenues declined (by 15 per cent). Messaging revenue was down, too, by 16 per cent – and, somewhat more surprisingly, so were tablet sales (down 4 per cent).
The biggest market segment winners included what the consulting firm calls ‘fourth wave/OTT services’ – digital services, in other words – which grew by 92 per cent.
Access revenues increased by 32 per cent, handsets by 11 per cent, and wearables by 150 per cent.
Intense competition among operators, however, meant operators had “a whopping 20 per cent rise in opex quarter-on-quarter and a 1 per cent decline in capex year-on-year”.
Industry income stayed flat while EBITDA grew modestly at 3 per cent over the course of the year.
Overall ARPU fell by 2.57 per cent in the US, with Chetan Sharma adding that “postpaid ARPU continues to decline for all operators with AT&T and T-Mobile experiencing double digit losses for the year”.