For the first time, U.S. wireless operators during the first quarter collectively saw a net decline in post-paid, or contract, subscribers. The largest seven carriers lost a combined 52,000 contract customers, according to the latest data from mobile consulting and research firm Chetan Sharma. The firm attributed the dropoff to wider adoption of prepaid phones in recent times and heightened competition for remaining potential contract customers.
Where will carrier revenue growth come from in the future? With smartphone penetration estimated at 43% as of the first quarter, Chetan Sharma says that still leaves room for people to upgrade and for plans that include data subscriptions.
Almost 70% of devices sold in the first quarter were smartphones.
The introduction of family data plans in the U.S. is also expected to be a boost for data revenues. Both Verizon Wireless and AT&T have confirmed that they plan to roll out “data share” plans that let customers pay for a fixed amount of monthly data and share it among family members. Current wireless family plans allow members to share voice minutes, but not data.
The U.S. mobile data market in the first quarter increased 21% from a year ago, and 6% from the prior quarter, to $18.7 billion. Data now makes up 40% of mobile industry service revenue. Chetan Sharma is predicting mobile data revenue will reach $80 billion in the U.S. this year.
Driving sales is the projected doubling of mobile data consumption this year, with data accounting for over 85% of U.S. mobile traffic. Another interesting factoid from the first-quarter report: The wireless-only population in the U.S. has surpassed 100 million, meaning about one-third of Americans don’t use landline phones. “Mobile will continue to increase its share of the household IT budget and thus improve the overall revenue picture,” stated Chetan Sharma.
Looking ahead, the firm expects the battle among the biggest tech players to heat up as they build out competing mobile platforms. “Google is preparing to get deeper into the handset business, while Amazon and Facebook are tinkering with their own handsets. Microsoft is banking on the Lumia success and the release of Windows 8 and its impact on the ecosystem will be closely monitored,” according to the report.
It also points out that Samsung is putting more resources behind the Tizen mobile operating system, while Apple still commands mindshare among developers and operators, as well as generating the most profits among phone makers.
Chetan Sharma projected that in the next three to five years, any company that is not doing the majority of its digital business on mobile will be “irrelevant.” That’s not to say the desktop PC will disappear. But the investments, strategy and execution will be driven by mobile. The firm points to apps and services today like Facebook, Twitter and Pandora that are already seeing mobile drive much or the majority of their user engagement.
“Expedia, Fandango and others are seeing the early signs of migration into the mobile dominated world,” it notes.