3G Mobile passed 200 M subscribers, is 100 B dollar industry already

I was there starting my 3G consultancy business in 2001 when almost everybody suggested 3G was the biggest failure and many thought telecoms would not survive this investment (and its enormous licence fees). At the same time in October 2001 the first 3G network did go commercially live in Japan by my customer NTT DoCoMo.

Today the GSM Association reports that we've passed the 200 millionth 3G mobile phone subscriber. For those interested in the technological variants, 131 M are on the GSM evolution path basic 3G or WCDMA ie UMTS; another 5 M on its 3.5G variant, HSDPA. Meanwhile 65 M are on the CDMA2000 variant of 3G called EV-DO (and its faster cousin, Rev A). Note that CDMA2000 1x RTT is not considered true 3G by most 3G tech experts, but if you like that included, then there are another 288 M more.

But what does it mean? First, that out of the 3 B mobile phone subscriptions in the world, already 6.7% have migrated to 3G. Or more practically, out of the 1 B mobile phone owners who live in the industrialized world where almost all 3G subscribers are (China with its 500 million mobile phone owners hasn't even issued 3G licenses yet) already 20% of mobile phone owners have upgraded to 3G.

The leading countries are the usual suspects, South Korea has over 75% of all subscribers migrated to 3G and Japan has over 60%. But Italy is well along the way as well, with some 35% of its population using 3G phones.

It is important to note that just having a 3G phone and subscription doesn't mean we surf the wireless internet madly and upload and download videos etc. Most of the traffic on 3G is still basic voice and text messaging. But about 30% of 3G service revenues tends to be data, where it is about 20% of 2G networks. And a strong segment of the 3G data (and 3.5G data) is the use of 3G data cards/modems.

And talking about the revenues. My estimate of a 42 dollar ARPU (Average Revenue Per User) of 3G users worldwide gives us a global 3G revenue level of 100.8 B dollars (at annual service revenue level). Since 3G subscriber numbers keep growing, and this level was reached at mid-year, it means that 2007 is likely to have total 3G service revenues hit the 100 B dollar mark.

The total license fees paid by 3G mobile operators six, seven years ago was about 100 B dollars. Now only six years later the industry earns that amount every year (and growing fast). Typically 3G licenses are 15 years in duration. I hope this puts to rest any lingering rumours that 3G licenses somehow crippled this industry.

200 Million 3G phone subscriptions worldwide earning 100 B dollars. Not bad for a 6 year old..

Comments

[Lars]

Hi Tomi:

Just a quick fact check on your Japan 3G penetration stat:

"The leading countries are the usual suspects, South Korea has over 75% of all subscribers migrated to 3G and Japan has over 60%."

The Telecom Carriers Assoc. (http://www.tca.or.jp/) official tally, for month ending June 2007, shows 74M out of 102M on 3G. We should cross the 75% mark when July totals are announced here sometime early next week.. 8-)

cheers,

Lars

[Lee Dryburgh]

I think there was more fact in the Arthur Andersen accounting audits of Enron than in this post.

"20% of mobile phone owners have upgraded to 3G" - are you seriously suggesting that 1 out of 5 people went to their operator and said that they wish to be upgraded to 3rd generation cellular? What surely has taken place is that all new SIM cards, certainly from what I have saw in the UK over the past two years, are 3G SIMs. The subscriber is unaware of this; life goes on as normal in terms of calls/texts and behind the scenes the 3G 2100 band is used instead of 900/1800. Now when you look at it this way which is quite clearly the more objective way, the rest of the piece falls apart (I can not pass comment on Asia though). And my advice to anyone who has inadvertently been "upgraded" to 3G is to disable it! More specifically disable the 2100 band forcing the phone to only select 2G networks because you will get the same voice/text service but the battery will last noticeably longer.

You appear to accept that users were not "upgraded" when you state "Most of the traffic on 3G is still basic voice and text messaging. But about 30% of 3G service revenues tends to be data, where it is about 20% of 2G networks.” There you have it, if most traffic is voice/text then users certainly did not ask for 3G in the majority of cases (since 3G would make no difference to them in such usage scenarios). Furthermore a change from 20% on 2G to 30% data usage on 3G is absolutely abysmal by any possible metric I could dream of!

“I hope this puts to rest any lingering rumours that 3G licenses somehow crippled this industry.
200 Million 3G phone subscriptions worldwide earning 100 B dollars. Not bad for a 6 year old.”
Utterly wrong in every regard; the industry was crippled and the figures you state in terms of earnings is simply healthy looking because as stated you have included the majority of 2G users who now use 2G services (voice and text) on the 3G band without being aware of it. So you are simply forcing in 2G and very successful 2G growth into the figures. Let’s put it this way – if the 3G band was turned off tomorrow would 100 B dollars disappear out of the system? No, only at maximum 10% of data revenues going by your own figures and data revenues are relatively small!
Finally as regards “I was there starting my 3G consultancy business in 2001 when almost everybody suggested 3G was the biggest failure and many thought telecoms would not survive this investment” this must be blatant lies or highly unreliable memory. I quite clearly recall working on the first European 3G rollout back in 2001 and remember the hype that went with it generally. But just for fun I looked to my hard drive for 3G slides dated around this period and as expected they were full of the most ludicrous (now after the fact) hype predictions regarding the success of 3G.