IDC Expects U.S. Wireless Providers to Focus On Business Subscribers as Total Voice Revenue Declines in 2008-2009

FRAMINGHAM, MA – March 29, 2006 – The business market is poised to play an increasingly important role in the U.S. wireless industry as total subscriber growth slows. With the consumer wireless market approaching saturation, service providers will focus on the business market and its attractively high voice average revenue per user (ARPU) and still early-stage adoption of data as primary growth drivers. Business revenue is expected to grow from $29 billion in 2005 to $52 billion in 2010.

The wireless industry will be impacted by numerous trends, including slowing subscriber growth, increased competition from MVNOs in the consumer space, evolution to a retail market model, voice ARPU erosion in both the business and consumer markets, and data pricing declines offset by growing data usage, especially in the business market. Wireless services are ideally suited to the business environment. Growth will be higher for businesses than for the overall market due to stronger subscriber growth rates within this segment. However, revenue growth rates will slow from 19% in 2006 to 3% in 2010 as subscriber growth rates slow and pricing erosions impact ARPU and revenue growth. As all industries become increasingly competitive and as companies look to differentiate themselves, incorporating wireless services into their communications and connectivity strategies provides businesses with numerous benefits.

"Continued business subscriber growth will come from three strong trends: businesses finding new ways to use wireless to meet their communications and connectivity needs; business usage policies, such as wireless devices on master corporate contracts, that better manage wireless costs and for which non-business usage is explicitly forbidden or implicitly discouraged (such as no free night and weekend calling); and the growth of data services, such as email and laptop AirCard subscriptions," says Scott Ellison, program director, Wireless and Mobile Communications at IDC.

Key dynamics over the forecast period include growth in the number of subscribers included in corporate contracts, the steady shift to corporate-liable accounts, growing availability of off-the-shelf data solutions, increased flexibility with data implementations, pricing declines in data transmission and voice calling bundles, emergence of services designed to improve ease of wireless management, and the prevalence of 3G wireless broadband networks. Together, this translates into stronger growth in the total business market compared with the consumer market over the forecast period (albeit starting from a lower base) and makes the business market a key engine of both subscriber and revenue growth throughout the forecast period.

The IDC study, U.S. Wireless Business Forecast 2006-2010: A Market of Opportunities (IDC #34980), examines the U.S. wireless business market. It provides IDC's most recent business subscriber and revenue forecasts from 2005-2010 with revenue segmented into voice and data services. The study discusses overall market trends, market challenges, and key dynamics to watch during the next year.

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