• by Mark Walsh  @markfwal, August 1, 2008

Spurred by a new generation of smartphones, mobile data revenues are expected to increase by 16% annually to $100 billion by 2017, according to a new forecast.

A new report by media research firm SNL Kagan indicates more than triple annual increases of 5% for overall wireless services over the next decade. Similarly, the average number of data subscribers will grow by 5.8% in that period, while wireless customers overall increase by only 2.9%.

With mobile voice service reaching saturation in the U.S., carriers are counting on mobile data revenue to make up for the slowing growth in new subscribers. That goal has led wireless operators to build new high-speed networks and launch a new wave of devices capable of delivering text, music, video, games and Internet access.

"We're kind of in the middle of the storm right now," said SNL Kagan analyst John Fletcher. "The iPhone really lit the fire and now everyone is trying to catch up with their own versions." The field of would-be "iPhone killers" includes the Instinct from Samsung Electronics and Sprint, the Voyager and Vu from LG Electronics and the BlackBerry Bold 900.

Fletcher says the emergence of such "media phones," featuring large screens and running on 3G or 4G networks, is just the beginning of their surge beyond business users into the mobile mainstream. SNL Kagan expects the 15% of wireless subscribers with media phones at the end of 2007 to jump to 26% by the end of this year, and to 87% by 2017.

Helping to drive smartphone adoption will be categories such as mobile video and TV, with revenue forecast to grow 22.5% in the next decade, games (12.7%) and music (13.1%). Already, major carriers are seeing mobile data gains driven mainly by text messaging.

AT&T and Verizon this month reported that mobile data revenue was up 52% and 45%, respectively, during the second quarter, compared to a year ago.

With the planned rollout of 4G networks in the next few years by AT&T and Verizon and the WiMAX network from Sprint and Clearwire, Fletcher expects competition for mobile data customers will only heat up more. "2009 and 2010 are going to be interesting years to watch," he said.