* Slowing growth leaves mobile operators vulnerable in the short term
* Mobile operators face fierce challenge from MVNOs, portals and financial institutions
* Mobile data revenues in Western Europe will grow from EUR7 billion in 2000 to EUR130 billion in 2011
CAMBRIDGE, UK, 6 July 2001 - Billions of Euros are at stake as companies battle for control of a mobile communications data market set to be worth almost EUR130 billion per annum by 2011, says a new report from Analysys, the global advisor in telecoms and new media (www.analysys.com).
The report, Controlling the 3G Value Chain, says that the next 24 months - leading up to the introduction of advanced non-voice services associated with third generation (3G) technologies - are critical for determining the winners in the 3G value chain. At a time when mobile operators are having to invest in the development of new applications and the rollout of 3G networks, they are being faced with falling average revenue per user (ARPU), which is not expected to be reversed until after 2003 by increasing non-voice revenue (see Figure 1 below).
Katrina Bond, lead author of the report, comments, "It will be another two years before mobile data services begin to reverse the decline in ARPU, leaving operators with some critical interim strategic decisions about where they position themselves along a new extended value chain."
Figure 1: Mobile Voice and Non-voice monthly ARPU in Western Europe 2000-2011 [Source: Analysys, 2001]
In order to deliver new types of service, such as infotainment and m-commerce, operators will need to add content aggregation and transaction management to their traditional service delivery and transportation skills (see Figure 2 below). This makes it attractive for them to form partnerships with portals, such as AOL and Yahoo!, and financial institutions, such as Deutsche Bank and Visa. In addition, operators with relatively low market share, and 3G new entrants that come to market without an established customer base, will find deals with mobile virtual network operators (MVNOs), such as Virgin Mobile, attractive as a way of building their customer base and network usage.
However, portals, financial institutions and MVNOs pose a threat, as well as an opportunity, for operators. Once established, these players are in a position to grasp the EUR8 billion in revenue per annum that is forecast for the marketing and billing of new infotainment and m-commerce services. Moreover, MVNOs may eat into the EUR70 billion that is forecast for the delivery of marketing and billing services for basic network access, a function which is considered an essential element of the network owners' business.
Figure 2: The mobile communications value chain in the 3G era [Source: Analysys, 2001]
At stake, says the report, are mobile data revenues that will increase from just EUR7 billion in 2000 to almost EUR130 billion by 2011. The majority of this revenue will come from datacomms services, such as messaging and file transfer, and infotainment services, with a small proportion being derived from m-commerce advertising and commissions on mobile transactions (see Figure 3).
Figure 3: Western European mobile revenue 2000-2011, by type of service [Source: Analysys, 2001]
Slow market growth in the short term and competition from portals, financial institutions and MVNOs, indicate that mobile operators are facing challenging times. However, if they adopt the right strategies now, there are billions of Euros in revenue to be earned.
Bond advises, "Operators have to find a balance which enables them to form partnerships with companies that have content offerings, while still retaining their role as the customer-facing deliverers of mobile services."
Controlling the 3G Value Chain provides detailed forecasts of the market for mobile communications services over the next decade, detailing the service types and market segments from which revenue will be derived.
The report is the third in a series that addresses the most pressing issues facing mobile operators in the current climate. The other two are: Successfully Marketing Mobile Data Services to SMEs, which examines the vulnerability of operators to IT vendors in the small and medium-sized enterprise sector; and Evaluating the Business Case for 3G Network Sharing, which examines the cost benefits of 3G network infrastructure sharing.
Written by Katrina Bond with Paul Knott and Ade Adebiyi, Controlling the 3G Value Chain is published by Analysys Research and is available in two packages, priced at: £1000 (US$1700), which includes one paper copy + one hour Analyst Support; and £1250 ($2125), which includes electronic access + one paper copy + one hour Analyst Support. For more information please telephone Analysys Research on +44 (0)1223 341300 or email email@example.com.
Analysys, the global advisor in telecoms, IT and new media, works at the forefront of the communications revolution, delivering advice and insight to established and new entrant players. From offices in Cambridge, London, Glasgow, Madrid, Milan, Munich, Paris, Kuala Lumpur, San Francisco and Washington DC, over 250 Analysys staff provide strategy and systems consultancy, conferences, information services and start-up support to the companies which are creating the networked economy.
Analysys Research reports, papers and online services provide authoritative coverage of this convergent industry, based on an unrivalled ability to fuse real-world experience, rigorous research and forward-looking analysis.
Recent products include:
* Market Realities of IP-VPNs (July 2001)
* Gigabit Ethernet: the solution to the MAN bandwidth bottleneck? (July 2001)
* Successfully Marketing Mobile Data Services to SMEs (June 2001)
* Evaluating the Business Case for 3G Network Sharing (June 2001)
* Back to Basics: New Entrant Carrier Strategies in a Bear Market (June 2001)
* Maximising Revenues through Advanced Service Provision: The survival strategy for European data-centre operators (June 2001)
* Interactive Consumer Broadband: Sex, Sport and Shopping? (June 2001)
* IP Local Loop: Key Facts (April 2001)
* Business-to-Business Infrastructure Providers: Network Operators in Ecommerce (April 2001)
* Business-to-Business E-billing (March 2001)
* Global IP Operators (February 2001)
* Mobile Location Services and Technologies (February 2001)
* Delivering DSL in Europe (December 2000)
* 3G, MVNOs and Acquisitions: Opportunities for Entering Mobile Markets (November 2000)
* ASPs: Business Models and Application (November 2000)
* Mobile Portals and ASPs (October 2000)
for more information please visit the website http://www.analysys.com
Tel: +44 (0)1223 341300
Martin Brooke Associates
Tel: +44 (0)1223 264050
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