In a jointly published report, the Telecommunications Industry Association and the MultiMedia Telecommunications Association estimate the mobile and wireless communications market reached $41.6 billion in 1997, and predicted the market will continue to grow to $70.1 billion by 2001.
The “1998 MultiMedia Market Review and Forecast” lists wireless services as the largest component of the wireless market at $32.7 billion in 1997, an increase of 18.7 percent from the previous year. Device spending reached $4.1 billion, up 37 percent, and infrastructure spending was down 22.6 percent, the report said.
The market review cited corporate downsizing and restructuring as factors contributing to the growth of wireless services and devices, as laid-off workers were forced to start their own businesses and retained workers had greater workloads-both scenarios necessitating the greater productivity wireless connectivity provides.
Also, it said families turned to wireless communication more as dual-income households became more prevalent. “Mobile communications permit family members to communicate with each other on the run, allow busy parents to keep better track of their children, and, as prices have come down, have become affordable to the average household,” the report read.
As to the decline in infrastructure spending, the review pointed to the ongoing reduction in network spending by cellular operators-which already have most of their networks complete-and the delays in building by C-block personal communications services licensees as reasons.
Looking to the future, TIA and MTA expect the wireless market to reach $70.1 billion by 2001. Most of this growth should come from PCS, the forecast stated, estimating nearly 60 percent of all handset revenue will come from PCS by 2001.
It projected PCS services spending will increase from $510 million in 1997 to $20.1 billion by 2001. Cellular spending should increase more slowly at a 4.8 percent compound annual rate to $30.8 billion by 2001.
However, customers are not expected to abandon cellular service in favor of PCS. Instead, TIA and MTA said new PCS customers will be metropolitan residents while those requiring service with greater rural coverage will remain with cellular and dual-mode phones will facilitate the transition between services.
Two-way messaging services and products are expected to be the paging industry’s main growth driver. Spending on paging services is projected to reach $7.2 billion by 2001, from $5.1 billion in 1997.
Specialized mobile radio, weighted by technical problems and licensing delays, grew slowly until last year, when the market jumped 17.6 percent to $1.6 billion. The industry is expected to continue to take off at a 25.7 percent compound annual rate through 2001 to $4 billion.
These predictions come in the face of several factors that could threaten growth. “A key factor in propelling wireless penetration and growth in services spending has been the decrease in monthly rates. In 1998, however, wireless carriers must meet the 911 mandate … By June 30, 1999, local number portability … will also be required,” the report read. “These requirements will add to the cost of providing wireless services and will create upward price pressure.”
However, increased marketplace competition, spurred by the eventual entry of new PCS carriers, should relieve some of this pressure and allow room to grow, according to the organizations.
