So then, this is not just the last Mobile Europe newsletter of 2012 but also the last one I will ever write*.
As such, I thought it might be good to take stock of where we have got to in the mobile industry. Of course, the fact that Ofcom has this week produced a meta-analysis of global mobile usage trends is indeed in large part responsible for this decision – providing me as it does with a convenient trove easily copy-and-pastable data.
But in any case, there’s some stuff in there on how mobile data revenues are trending, how usage is growing, and a look at which countries offer the most value to consumers and so on. If any of this whets your appetite for more detailed analysis, I should point out Ofcom’s research is available in full here.
Onwards, then, to our look at where things stood at the end of 2011 (yes Ofcom is a year behind, given that a full analysis of 2012 trends would be pretty taxing). If you asked me what might have changed if these were 2012 numbers, I’d say there’d be some impact from LTE on data volumes, but not a lot. Most of the other trends would remain pretty constant.
Who makes the most mobile calls?
The Swedes – at 213 outbound minutes per capita per month. The Dutch make the least, at 106 minutes per month. Consumers in the USA (615 minutes per capita per month) and Australia (329 minutes) make a lot more. In Japan, the monthly average is only 95 minutes.
Who has the most 3G connections?
Sweden again, at 92 connections per 100 of the population. Japan is at 97, Australia 83 and the USA 57. There were no figures given for the UK.
Who has the most Mobile Broadband connections?
Sweden, yet again, with almost twice as much penetration as anyone else – at 21.3 connections per 100 people. Italy was second, in Europe, at 14 connections per 100.
Who spends the most money, per head, on telecoms services?
The Dutch – spending £534 per capita per year, closely followed by the Swedes at £499. The UK, France and Germany are all roughly the same, in the mid-£400 range. How does that benchmark against the rest of the World? Well, US consumers spend £598 per year, Japanese £708 and Australians £790.
In India, by the way, that number is £9. In China £53.
Who uses the most data?
Ofcom used Cisco’s VNI figures for this one, referencing the VNI’s stat that UK consumers, er, consume the most data, even more than the Japanese.
What is happening with mobile broadband data?
Ofcom went to Analysys Masons May 2012 report “Wireless Network traffic Worldwide” for this, to support a supposition that mobile broadband traffic growth (ie non-smartphone data) is slowing. According to Analysys Mason, in 2011 four of the eight Western European comparator countries saw a decline in traffic per mobile broadband SIM. Use in Germany (the largest nation in Western Europe) declined by 0.17GB per month to 1.04GB in 2011.
What about mobile data traffic overall?
Ofcom only reproduces Cisco’s VNI figures up to December 2011. These show that France saw year on year growth of 224%, with the UK only showing 58% growth. Globally, mobile data growth across 2011 was 133% (again, Cisco VNI figures).
Mobile data revenues exceeded fixed broadband revenues for the first time in 2011, driven mainly by mobile data revenues from the USA and Japan. Nearly all other countries (the exception is Australia) still see fixed data revenues outdo mobile. (2011 numbers) .
Spend per mobile connection on data, including SMS, grew between 2006 and 2011 in every country except Ireland. It increased most in percentage terms in Japan and the US, growing 28.6 percentage points (pp) and 26.4pp respectively in this period (Figure 6.47). Spend also increased by over 20pp between 2006 and 2011 in Australia (23.9pp), India (23.2pp), Canada (22.3pp), Germany (21.3pp) and Russia (21.1pp). By contrast, the smallest increases in data as a proportion of spend per connection between 2006 and 2011 were in Italy (8.1pp) and the UK (9.2pp).
How much of what operators make is accounted for by data?
Data as a proportion of total mobile service revenues has, of course, grown in all countries, but not perhaps as much as you might think. According to Ofcom, between 2006 and 2011, the contribution of data services to total mobile revenue grew most in Japan (by 29 percentage points), and also grew by over 20pp in Australia (24pp), Germany (22pp) and the US (21pp) among the countries for which we have figures. By contrast, the smallest increases were in Poland (3pp), the UK (8pp), France (9pp) and Italy (9pp).
In absolute terms, Ofcom estimated that in 2011, data (not including SMS) accounted for only 10% of UK mobile service revenues, and 25% of German mobile service revenues.
I think these look a little low – something that I think is explained by the difficulty of recognising revenues when consumers by bundles of voice, text and data.
Which countries spend the most, per device, on mobile data?
Japan, Canada, Australia and the USA in that order. Ofcom used IDATE data for this, along with its own data. The figures don’t include data tariffs that are bundled with voice, though, so could perhaps be taken with a pinch of salt. The figures are only for standalone data traffic.
Are we still making more and more mobile calls?
Yes and no – mobile voice minutes increased 20% in Italy over the past 5 years, 15% in the UK and 14% in Germany. In France, however, total originating mobile voice minutes grew only 1% between 2006 and 2011. In The Netherlands, growth over the five years was 4%
SMS – who has the busiest fingers?
The USA, seemingly by a long way, sending over 600 texts per person per month, with the next highest a bunch of countries all at 200 SMS per month. In The Netherlands and Spain, volumes of SMS are falling. In all other countries, volumes increased in 2011, with a volume increase of 17% in the UK. For many countries, the rate of growth is levelling off, however.
Why do people send texts?
Convenience, ease of use, and immediacy. Over half of UK smartphone users (second highest at 56%) said that the statement “I send text messages instead of making phone calls because it’s easier” applied or totally applied to them. The highest proportion was in the US, at 58%. Price tended to be only the fourth or fifth reason behind these other options.
What about SMS revenues?
Ofcom says that only the UK and Canada are seeing falling SMS revenues and increasing volumes. Spain and The Netherlands (-4%) are seeing decreasing volumes and decreasing revenues from SMS. Spain is actually seeing increases in revenue per message, but usage has fallen at such a rate that revenues have fallen in total.
So is there still money in mobile?
Overall, mobile revenues have shown at a CAGR of 5.2% over the past five years, growing from £292 billion in 2006 to £375 billion in 2011. The USA accounted for an amazing £106 billion of that total mobile revenue, by the way, China £62 million and Japan for £57 million. Countries like Germany, Italy and the UK show revenues around the £15-20 billion mark.
What has all this meant for mobile ARPUs over the past five years?
Well, starkly put, although overall mobile service revenues are growing, ARPU is down. “Average monthly revenue per mobile connection fell in 15 of our 17 comparator countries in 2011,” Ofcom’s report said. The highest ARPU drop was in France, from £24 to £22 in 2011. Only the USA and The Netherlands showed an ARPU increase between 2010 and 2011. The second lowest growth rate in this period was in Ireland (-7.4%). In the UK revenues declined between 2006 and 2011, at a CAGR of -1.9%.
So where are we? I don’t think there’s much that’s too surprising in Ofcom’s figures, except there is still that disparity between the relatively low reported growth of revenues attributed to mobile data, and those high data traffic growth figures. Two years ago, we’d have called this the data profit gap or something, but now there seems to be more of an assumption that a) those initial high growth rates don’t last – they are a spike that levels off and b) data revenue recognition is difficult.
I think the interesting thing to look for in 2012 will be the impact that LTE has on both of these. We may not see a great deal more data by volume as a result of LTE, but we may see it appear to be more profitable, and we may also see operators move to pricing structures that will make it easier for bodies like Ofcom to actually recognise data revenues as just that.
If you want to see where operators may be headed, one indication came this week from Amdocs, which commissioned a report from Heavy Reading, and found that of the 70 operators they conducted in-depth interviews with, 100% of the European respondents see the need to bring in policy and charging integration, so that they can produce plans that relate to the device type, network status, and customer information. Most operators wanted to do this to be able to provide personalised services and rate plans to users.
If that vision works, if it works, what it means, in turn, is that operators will be able to get a firmer grip of the monetisation of mobile data traffic. In any case, I’d expect to see, in 2012, more ability amongst operators to recognise the value of their data networks (notwithstanding current capex demands). What would also be interesting this time next year would be to track if there has been a recognisable “speed premium” from LTE – meaning that customers are paying more for speed rather than volume.
If there has been then that, allied to the “cost per bit” efficiency gain of LTE, may yet see LTE have a positive impact on mobile operator profitability.
* And finally… yes, just to come back to this, if you haven’t heard already then here’s confirmation I am moving on from Mobile Europe. I’d like to thank everyone for their support and interaction over the past nine (count them) years, and wish the new team at Mobile Europe all the best.
See you in 2013.
Keith Dyer
Editor, Mobile Europe