The Mobile Internet Report Key Themes*

Key Scenario Drivers for US Wireless Industry
Service Revenue
Upside
Case
Base
Case
Downside
Case
6.7%
’09-’15E
Service
Revenue
CAGR
2.5%
’09-’15E
Service
Revenue
CAGR
-2.1%
’09-’15E
Service
Revenue
CAGR
Data takes off and helps wireless service revenues hold in the mid to high single digits of
growth. The advent of tiered data pricing helps push data penetration higher. This is
further supported by the launch of 4G networks. Wireless broadband speeds on 4G
networks satisfy consumer bandwidth needs, setting the stage for wireless broadband
substitution. We estimate a 20.1% ’09-’15 data revenue CAGR.
Subscriber growth continues to slow and penetration (excluding M2M) reaches 97% by
2015. Voice increasingly becomes commoditized and the rise of unlimited voice
packages drives price/MOU from $0.051 in 2008 to $0.036 in 2015. We estimate a -3.1%
’09-’15 voice revenue CAGR. Carriers push to get subscribers on text messaging bundles
is successful and by 2011 the market reaches maturation. We estimate text messaging
to fall to 16% of data revenues from roughly 30% today and to have 2.0% ’09-’15 CAGR.
Non-messaging data revenue represents the main growth engine for service revenue
growth, driven by rising smartphone adoption and data card uptake. Smartphone and
feature phone penetration reaches 60% penetration by 2015. 4G network coverage
becomes more ubiquitous by 2013 and a tiered pricing structure begins to emerge. The
lines between data and voice begin to become blurred as VoIP becomes more prevalent
yet the current pricing structure for separate voice and data packages still dominates.
Wireless price wars plague the industry. Voice becomes highly commoditized and is the
main lever the carriers pull to wage the war. We estimate a -6.1% ’09-’15 voice revenue
CAGR. Carriers enabling VoIP applications over their networks are the best equipped to
survive, benefitting from the more cost efficient IP architecture. Data is also faced with
intense pricing competition and the carriers ultimately move towards the dumb pipe
model.
Source: Simon Flannery, Morgan Stanley Research estimates.
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