Cellular Market Shows Growth

US cellular market shows steady growth, booming ARPU

May 21, 2007

2 Min Read

BOSTON -- The US cellular market has been growing at a steady pace in 2006, adding around 18 million connections year on year, reveals Wireless Intelligence – the joint venture between Ovum and the GSM Association.

“By Q4 2007, the US is expected to pass the 250 million connections mark. With a level of penetration set around 80%, the market is showing healthy signs of growth” says Joss Gillet, Senior Analyst at Wireless Intelligence. Verizon Wireless is catching up on AT&T’s market share, set at 26% in Q4 2006. In contrast, Sprint’s market share seems to be stagnating since Q2 last year.

Table 1:

Rank

Operator

Country

Growth

1

Leap Wireless

USA

33.66%

2

Sprint USA

USA

16.42%

3

T-Mobile

USA

15.44%

4

Verizon Wireless

USA

15.03%

5

AT&T

USA

12.59%





In 2006, the US cellular market reached 232 million connections and is expected to grow by 9% this year to add around 20 million connections in 12 months. With a penetration rate set at 80% in Q4 last year and a very high level of average voice minutes, the real phenomenon to watch in the US is the uptake of data revenues.

Between Q1 2006 to Q1 2007, major carriers have seen their non-voice ARPU increase by 30%-60%. This growth is driven by the fast adoption of CDMA2000 1x EV-DO and WCDMA services. “As carriers expand their network coverage, good handsets become widely available and data services become widespread, end users now have at least three good reasons to use high speed connections on their mobile” says Joss Gillet.

AT&T is expanding its WCDMA network which today represents less than 5% of its total connections. With the HSDPA upgrade, the operator can expect a fast migration of its GSM installed base to WCDMA/HSDPA. We forecast that AT&T’s WCDMA/HSDPA subscriber base can represent around 30% of its total connections by end of 2010. Verizon Wireless launched, three years ago, what appear to be today the most mature EV-DO network and represent 28% of its installed base. The deployment of EV-DO Rev.A will boost the consumption of data traffic even more.

Finally, the phenomenon of multiple SIMs per users is distorting the overall non-voice ARPU trend. “With a fast growing prepay installed base and consumers using more than one device, the reality is that market penetration is overstated as we are, in effect, measuring Average Revenue Per SIMs. The growth of Average Revenue Per Real User is understated” concludes Joss Gillet.

Wireless Intelligence

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