Subject: [NEXTEL-1] Entertainment services to boost ARPU

From: Marcel <[email-masked]>
Date: Fri, 28 Mar 2003 13:35:45 -0500

Entertainment services to boost ARPU

Posted to the site on 27-Mar-03

Mobile operators at last appear to be halting the long-term decline in average revenue per
user (ARPU) - an essential step in ensuring continued revenue growth in the face of
stagnating subscriber numbers - according to a new report released this week by Analysys.
ARPU in Western Europe in 2002 averaged US$33.19 per user per month; the number of active
subscribers is forecast to grow just 5% in 2003 to 309 million.
The report concludes that France, Germany, Spain and the UK all experienced growth in ARPU
for their active subscriber bases during 2002, while Italy's ARPU remained almost flat,
and Sweden's continued to decline.
"The main reason operators have been able to improve ARPU is because they are achieving
big gains in revenue from non-voice services, which include person-to-person messaging and
mobile entertainment services," says Katrina Bond, lead author of the report.
Analysys estimates that mobile operators in Western Europe generated an average of 12% of
their revenue from non-voice services in 2002, but points out that some operators cited
even more impressive figures. For example, in the final quarter of 2002, mmO2 obtained
over 17% of its revenue from non-voice services in the UK and nearly 20% in Germany.
"We forecast that 24% of mobile service revenue will come from non-voice services by 2005
and 36% by 2008, with the bulk of that going to mobile operators," added Bond.
"Person-to-person messaging has been responsible for most of the growth to date, and these
services will continue to be important, but mobile entertainment services such as
downloadable games will become increasingly significant revenue earners."
The report forecasts that, across Western Europe, person-to-person messaging will grow
from US$13.9 billion in 2003 to US$21.4 billion in 2008 as this service extends from SMS
to also include large volumes of multimedia messages and email. Meanwhile, mobile
entertainment service revenue will grow from less than US$3.2 billion in 2003 to nearly
US$11.7 billion in 2008.
However, the long awaited and much delayed 3G services will only account for 6% of
subscribers and 6.5% of non-voice revenue in 2005. This not only widens the opportunity
for GPRS, but also gives public wireless local area networks (WLAN) a greater opportunity
to take hold. Analysys forecasts that 1.5% to 2.5% of annual 2.5G and 3G non-voice revenue
could be lost to public WLAN by 2008, and that the loss could be as high as 8% amongst
business customers.

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