WASHINGTON-The predicted growth areas for wireless services will not be dominated by voice, according to a Commerce Department 1998 outlook report. Rather, current and prospective carriers will try to develop and build out advanced messaging, data transmission, location and remote monitoring applications. In addition, look to the East and to the Third World for the most lucrative wireless growth, especially in the wireless local loop arena.
While “The U.S. Industry and Trade Outlook 1998,” published jointly by DRI/McGraw-Hill, Standard & Poor’s and the U.S. Department of Commerce/International Trade Administration, points to voice services as the most lucrative of wireless offerings thus far, “data transmission is expected to comprise an ever increasing portion of the wireless services market.”
With more people becoming comfortable with data technology-from personal computers to the smallest pocket organizers-Commerce estimates that the coming wireless data market will grow from 1 million users in 1993 to 4.1 million users by 2000, with some analysts boosting that number to more than 10 million users six years from now accounting for half of a cellular carrier’s revenues.
The proliferation of digital wireless transmission, expected to account for more than 45 percent of all subscribers by 2000, will overtake the analog market sometime next year. The debate between Time Division Multiple Access and Code Division Multiple Access technology will continue “well into the future,” with both co-existing in the U.S. market for several years to come.
However, “what customers really want is the ability to make clear calls at competitive rates whenever and wherever they wish, consistent and reliable service, customer support and easy billing, and they are unconcerned with the technology or frequency that provides it,” the report noted.
Last year, the U.S. paging industry served some 41 million users, and that number will be driven in the future by such new features as two-way paging and a resurgence of voice messaging. Subscribers also have been modifying the ways in which they use their old “beepers,” which now can give them access to fairly long alphanumeric messages, data transfers and several types of business and personal information.
Commerce’s outlook on personal communications services was limited because of the relatively few number of going PCS concerns here compared to current cellular and paging operations. Certainly, the introduction of PCS service into a market has spurred competition in that market, which in turn has forced cellular and paging pricing programs to adapt. To survive in the future, the Commerce report suggests most PCS carriers-especially those with smaller pieces of spectrum-find a unique niche to serve, including high-speed data and PBX-like office services.
The trend toward marrying wireline and wireless companies also was an offshoot of PCS’ entrance into the marketplace, portraying such partnerships as good things when it comes to geographic reach, bulk equipment purchases, bundling service and cutting airtime costs. “Generally, the entry of PCS carriers into the wireless arena is expected to have a net positive impact on cellular providers over the next several years,” the report said. “Although the average revenue per subscriber will fall as a result of price competition and the increasing percentage of consumers, these losses are likely to be more than offset by overall revenue gains as the number of subscribers increases.”
As far as growth projections are concerned, Commerce believes new cellular subscribership will decline somewhat beginning in 1998, with numbers only increasing 4 million to 6 million per year until there are some 70 million users by 2000. Cellular service revenues could reach $32 billion next year. There could be as many as 10 million PCS users by the end of 1998, with $2.7 billion in revenues. By 2000, more than 25 million PCS subscribers could spend $9 billion for service.
By the new millennium, the Yankee Group, which contributed to this outlook, believes many traditional wireline customers may forgo their service in favor of wireless service exclusively. The group estimates that, by 2000, “wireless traffic will account for 20 percent of all voice calls, up from 2 percent in 1996.”
During the next year, paging will continue on a modest growth curve, with new subscribership driven by service and not price. The Strategis Group, another contributor, estimates 60 million pagers (excluding those used by narrowband PCS subscribers) could be in service.
Globally, the wireless industry “is poised for tremendous growth during the next five to 10 years,” the outlook said, with the East Asian market, Brazil, China, India, Indonesia, Poland and Mexico demonstrating the largest potential. The fastest-growing markets for wireless service in recent years have included Japan, Colombia, Lebanon, Ukraine, Ecuador and Paraguay. Although 40 percent of the world’s wireless subscribers currently live in North America, during the next five years that number will drop to 25 percent as the Asia-Pacific market grows.
Wireless local loop services probably will dominate mobile service in these emerging areas as countries decide to leapfrog the more expensive wireline technology. There currently are 875,000 WLL “lines” in 25 countries; when these systems mature, that number will grow to 2.5 million. “With the waiting list for telephone lines estimated by the International Telecommunications Union at 43.5 million as of 1995, and total unmet demand probably much higher, this trend is likely to continue,” Commerce said.
“The real opportunity for wireless carriers in the long term will be their ability to penetrate wireless minutes of use,” the report said. “Wireless accounted for an estimated 56 billion minutes of use [in 1993], compared with 4 trillion for wireline. By 2003 … wireless may well-account for as much as 2 trillion minutes of use, compared with 5.6 trillion for wireline.”
