Worldwide Mobile Connections Will Reach 5.6 Billion by Year-End

Worldwide mobile connections are expected to reach 5.6 billion by the end of 2011, up 11 percent from 5 billion connections in 2010, according to Gartner. Mobile data services revenue will total $314.7 billion in 2011, a 22.5 percent increase from 2010 revenue of $257 billion.

“Mobile data traffic will increase significantly as more people will have access to mobile data networks, there is a migration toward smartphones and an increase in sales of media tablets,” said Jessica Ekholm, principal research analyst at Gartner. “Mobile data volumes will continue to grow as mobile data networks become faster and more ubiquitous, while at the same time the number of data users and data usage per user is expected to grow.”

“Data revenue will continue to grow but at a much slower rate,” Ms. Ekholm said. “This is causing a decoupling between revenue and data traffic, and it is also creating an increase in network costs for carriers as they try to sustain growing data traffic.”

Worldwide mobile connections will experience steady growth through 2015 when mobile connections are forecast to reach 7.4 billion, and mobile data revenue will reach $552 billion.

In calculating its forecast, Gartner assumed there are four major mobile data traffic drivers: growth in the number of mobile connections, increasing availability of higher-speed data-centric mobile networks, smartphones, and data-consuming content and applications.

A growing number of mobile connections will lead to higher demands on communication service providers’ (CSPs’) data networks as more people access the networks to use mobile data and to send text messages. In addition to the total number of connections growing, Gartner also expects that mobile data usage per connection will increase throughout the forecast period and that there will be a shift in mobile users’ perception of mobile data around the world, as data plans go from being seen as a luxury, to being considered a nice-to-have service, to finally being perceived as potentially essential.

Gartner expects communications service providers (CSPs) to increasingly start moving toward offering more flexible and more personalized data plans, which should help capture a larger mobile data user base. CSPs have also upgraded their networks by offering faster download and upload speeds to consumers, which have helped improve the general perception of data quality and thus led to increased data uptake.

“What carriers currently need are innovative ways to increase data revenue while finding smart solutions to manage a growing demand in data,” said Sylvain Fabre, research director at Gartner. “Ultimately, it will be the consumer who chooses the content he or she wants to use, and carriers need to ensure that the quality of experience is good. A substandard user experience may lead to higher churn.”

Gartner analysts said carriers should investigate the pros and the cons of more customized pricing plans, such as tiered pricing, a la carte and usage-based plans, carefully weighing additional costs and future benefits. Additionally, CSPs should look to offer increased flexibility in pricing and introduce add-on pricing models, in which users are able to add data access when they want to. These add-on pricing models could include paying for additional usage and additional speed, and charging a fee for voice over Internet Protocol (VoIP) or for gaming.

“Carriers should focus on increasing the level of clarity and the transparency of their mobile data contracts in order to make the majority of customers feel more at ease in using data services. This is particularly important when it comes to data roaming,” Ms. Ekholm said. “Offering clients various ways of being able to track and monitor their data usage would help carriers receive a larger amount of revenue from more profitable lower-usage, medium-pay users.”