Americans love mobile data…first country to surpass $10 billion in revenue

Tuesday, May 12, 2009 7:47
Posted in category Featured, internet

We all know that the current crop of smartphones from RIM, Apple, and Google/Android coupled with the much greater availability of 3G networks are ushering in a new era of mobile data usage that is literally bringing many carriers and networks to their knees. We often hear of other countries such as Japan, Korea, Singapore, etc that offer either faster broadband speeds, mobile data speeds, etc. However, we don’t often hear about the U.S. being first in much of anything technology/gadget related nowadays. However today I can tell you we are. It isn’t for some crazy gadget that will revolutionize our lives or make it more efficient. In fact is isn’t really anything to be excited about at all: Mobile Data Revenue.

When we hear revenue we instantly think of carriers, restrictive data plans, and money coming out of the consumers pocket. Concerning that, according to Chetan Sharma, an independent telecommunications industry researcher, in the first quarter alone, the U.S. accounted for over $10 billion in mobile data revenue. Whether we are getting screwed or not as the customer of course depends on your point of view and how you view life. Are we paying too much for subpar service? While it isn’t much fun to think of how much money we have to spend on mobile data as many other countries do infact have much cheaper mobile data plans, it is something significant that we have such a large user base.

Usually, slow infrastructure upgrades and rollouts in the U.S. can be attributed to large swaths of open land to cover where as some of the countries mentioned earlier, while more advanced with faster technologies, simply have a much smaller footprint that they have to provide service for. This smaller footprint which is pretty significant means a direct savings at the bank. Just take a look at an actual world map that is to scale. Look at the U.S., then look at Japan. Now, take Japan and visualize only about 25% of it remaining and then you will have a rough estimate of the actual geographical area that Japan telcos and other service providers have to cover. It’s substantially smaller isn’t it. Japan is very mountainous meaning most of the people cluster together in cities, ie: Tokoyo.

In the U.S. while there are many large cities and metropolitan areas, there is also far more open and flat land that is habitable meaning telcos and other service providers will have to spend money that would otherwise be spend on next gen technology to build out current gen technology further out into the “wilderness”. It is just a “con” that comes with the added territory. It isn’t all bad. Because we have such large amounts of space we don’t have to have tiny apartments that a dog would be tight in nor do we have to walk everywhere because we have ample room (in most places) for cars and properly sized streets.

Moving back to mobile data revenue, here in the U.S., Verizon, AT&T, Sprint and T-Mobile currently hold spots 3rd, 4th, 6th, and 8th respectively in regards to global mobile data revenue. If you’re curious, Japan’s DoCoMo NTT and China Mobile are the one/two learders. Adding another pro/con comparison to the mix comes in the form of technologies. While the U.S. has large amounts of data usage, as far as the actual technology goes, we are behind many other countries (mentioned earlier). Such technologies as mobile payments, biometric security and e-commerce sound like high tech futuristic things, however they have actually been around for many years.

For example, Japan has had mobile payments for more than 5 years now! What is the deal here in the U.S. that we can’t get out ducks in a row and bring now “old” tech to the masses? Well, that is a whole entireley different issue outlined here. Long story very short, the various groups involved are all greedy and don’t want to budge on revenue sharing models and several other issues. Sadly, because of this, it could easily be until 2012 at the earliest before we see mobile payments arrive stateside.

Regardless of the actual technologies used, mobile data usage is only going to increase, at first because of the sheer increase in actual users who are using mbile data. Eventually as more and more countries adopt more advanced technologies that require greater amounts of data as new user growth slows and levels out, only then will we see a different type of market. If you think about it, all a carrier really wants to do now is add more users. There is still plenty of unreached potential in many countries including China, India, etc. But, once those user bases are tapped out and new user growth slows, carriers will have to turn towards a new marketing scheme: Mobile Data Usage.

Now one would think that with a greater amount of mobile data users that the service itself should be more affordable. However, time and time again we have seen where that is rarely the case and instead the carriers use it as an opportunity to put a tad moree pading into the pockets. Still, eventually mobile data will become a necessity instead of a mere “frivolous feature”. Of course, many would argue that with the vast amounts of mobile data users even in the current economic downturn shows that mobile data is already becoming a necessity. I’ll leave that assumption to you.

Mobile data usage is a very lucrative business for carriers and a border line necessity for consumers. In the push to the future as more and more mundane objects, work flows, and a number of other areas of our lives come online, the need/want to access them from wherever we are at any point in time is only going to rise. So I ask you, are you currently contributing to the $10 billion in anual revenue that mobile data usage racks up? If not, why? Are mobile data plans still too expensive? All of these questions are important questions that carriers even ask themselves. Give us all a hand below.

**Readers who are interested in a much more detailed breakdown of the analysis from the 1st quarter can continue reading that here.

Source: NYT, Image Source

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