Abstract

Mobile Communications Services Diversifying

In Europe, mobile communications service now embraces a wide variety of functions, including communications, entertainment, social networking, and payment mechanisms. Mobile communications has become an integral part of people's work, leisure, vacationing, and every other aspect of their daily lives.

With the adoption of HSDPA/HSUPA technology and the gradual introduction of Web 2.0 applications, the rate at which new mobile communications services are rolled out will speed up even further in 2007 and 2008. At the same time, mobile communications operators will be working even more closely with ISPs, content providers, and IT system providers.

Popular Internet services such as search, blogging, and online chat are being introduced into the mobile sphere. The key features of mobile communications, such as real-time communication and interactivity, facilitate the integration of mobile phones and mobile communications service with various types of consumer electronics. This has resulted in to the development of distinctive mobile Internet services such as mobile photo frames, which integrate mobile communications with digital picture frame technology.

With the growth in video transmission and downloading and the introduction of new video services, the scope of application of MMS has grown steadily broader. This in turn has caused the volume of MMS messages sent to increase; MMS is following in the footsteps of SMS to become an important data transmission tool in the European mobile communications market.

Subscribers to Grow Further Between 2007 and 2010

Revenue from data services will continue to grow rapidly over the period 2007 -2009. This will be followed by a period of slow but steady growth after 2010, when the 3G/3.5G penetration rate is expected to reach 40%. 2007 -2010 will thus be a very important period for the development of mobile broadband in Europe. 

During this period, the number of 3G/3.5G subscribers will gradually start to approach the number of 2G/2.5G subscribers. New subscribers will still constitute an important driver of revenue growth. Given the already high mobile phone penetration rates in the Western European market, new subscribers will fall into three main categories: existing mobile phone users who acquire a second mobile phone number, the elderly, and children under the age of 13.

Mobile phone operators in Western Europe have already begun to introduce new handset models designed specifically for senior citizens or for children. The emphasis in these mobile phone models is on basic voice capabilities, with some special functions. For example, mobile phones designed to target elderly users may feature an easy-to-use three-key design, and may provide direct links to a healthcare service provider or call center. Mobile phones designed for children are usually simple and inexpensive, and often incorporate GPS positioning capability.

The number of mobile phone subscribers having two or more mobile phone numbers is increasing. Therefore, there has been a gradual increase in demand for dual-SIM-card mobile phones that allow users to retain their old phone number or user separate numbers for personal and work-related calls. This market segment appears to offer significant growth potential. By the second quarter of 2007, Western European mobile operators, such as O2, and mobile phone retailers were already starting to sell dual-SIM-card models.

Flat-rate Billing Stimulating Demand for Mobile Internet Access

While the number of mobile phone subscribers continues to increase, the introduction of flat-rate billing and other special charge rate plans has caused voice and data charge rates to fall, and has led to an increase in voice call time and in data transmission volume.

As flat-rate billing has become more widespread, subscribers have grown more willing to use their mobile phones for accessing the Internet. In particular, mobile Internet access has become popular among business users, who often need instant access to the Internet, and among the young trend-setting segment, including both teenagers and young adults.

2007 will be the year in which mobile Internet access really started to take off in the Western European market. The growth of mobile Internet access will in turn lead to increased demand for mobile content downloading, and will stimulate the migration of popular Internet services to the mobile sphere. The growth in downloading and data storage volume and the increased take-up of video applications will cause sales of Smartphones and other high-end mobile phones to grow steadily.

The new trends will boost demand for mobile phone models that offer rapid data processing capability, flash memory, high data storage capacity, and long battery running time. Demand for mobile phone peripherals such as memory cards and headphones will also increase.

Mobile Banking and Mobile Payments Starting to Take Off

With the growth of mobile Internet access and the rollout of new services such as mobile ticketing, mobile banking and mobile payments are starting to take off in the Western European market. However, it is not yet clear what business model operators will use to develop the market segment; many operators are still in the process of forming partnerships with financial institutions.

The emergence of mobile banking and mobile payments will force operators to pay more attention to security management and anti-virus software, thereby creating significant business opportunities in these areas. Mobile micro-payments service will be introduced in Germany, the UK, Scandinavia, the Netherlands, Belgium, and Luxembourg in late 2007 and early 2008, which will lead to a gradual increase in the use of NFC and RFID chips in mobile phones, and will stimulate demand for NFC- and RFID-capable automatic vending machines and payment systems.

Appendix

List of Companies