Wireless Subscribers to Increase Through 09

The U.S. wireless industry opened 2005 with strong forward momentum following a banner year in 2004 that witnessed the addition of new wireless subscribers and the launch of 3G consumer devices.While this trend is expected to continue through 2005, it is inevitable that there will be an eventual slowdown as subscriber penetration surpasses 75% of the U.S. population, leading to heightenedcompetition brought on by the absence of first-time subscriber opportunities.

Meanwhile, it is clear that U.S. wireless carriers have not yet fully leveraged data services to increase their average revenue per user (ARPU). As wireless providers introduce a range of new data services, IDC forecasts that U.S. consumer wireless ARPU will trend slowly upward to $48 in 2009. US business wireless ARPU will also steadily grow to $74 in 2009.

The wireless industry faces several key challenges, including quality of service and ease of use for 3G devices, changing regulatory policies, pressure to differentiate value in the market, fast-moving technology trends, uncertain economic conditions, and fickle wireless subscriber behavior. “What this means for wireless carriers is that they need to focus on aggressively diversifying their base of service revenue and creating a ‘brand’ experience to drive data ARPU higher,” said Scott Ellison, program director, Wireless and Mobile Communications at IDC.

By the end of 2007, IDC expects the main focus of the market will become subscriber upgrades to 3G devices and the adoption of 3G data services, including a strong business subscriber shift toward 3G. As wireless subscriber market reaches near-total saturation in 2008-09, IDC forecasts both increased voice pricing pressures and renewed focus on driving wireless data revenue to replace and augment declining voice ARPU. 3G wireless services will provide carriers with the opportunity to diversify revenue streams and position themselves as core voice and data communications providers to both consumers and business users.

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