The www.teledotcom.com site has several articles explaining the wireless alphabet soup.
Money Talks
by John Salak
teledotcom.com
When it comes to judging any industry's health, the bottom line is exactly that--the bottom line. The communications industry is no different. Its health is measured in terms of past, current and projected revenue. With that in mind, the industry has a pretty peachy complexion.
Thankfully, there is no shortage of data on just how much money communications services are generating--either in the United States or worldwide. In fact, every source has its own twist on current levels and projected income. What's consistent throughout these studies is the growing strength of wireless services revenue. Their current and projected growth rates simply outstrip virtually all other services.
Total U.S. service revenue, for example, was placed at $252 billion last year by the Telecommunications Industry Association (TIA, Washington, D.C.) in its recent 2000 MultiMedia Telecommunications Market Review and Forecast. The total represents a jump of almost 9 percent over 1998's revenue. Similar increases are expected for each of the next four years, bringing U.S. telecom revenue to $345 billion by 2003, according to the TIA's estimates.
Not bad--at least when comparing it against what's happening with U.S. local and long-distance service revenue. Total local service income was placed at $93.5 billion last year, up slightly more than 5 percent from 1998. The association expects this type of increase for the next four years, at which point revenue tops out at $115.3 billion.
The long-distance market did even better last year, coming in at $113.4 billion, representing a hike of almost 8 percent over 1998. The TIA believes long-distance revenue will grow at a slightly higher rate in the next few years until income reaches $154.6 billion in 2003.
These growth rates, nonetheless, pale against what is being seen in the wireless market, which last year recorded $45 billion in revenue. "Spending on wireless services rose 20.5 percent, reflecting the expanding penetration of PCS services along with the continued growth in cellular phones and pagers," the TIA report notes. Robust annual growth rates of between 11 and 16 percent are expected to continue through 2003, when revenue should hit $75.6 billion.
The wireless revenue binge isn't limited to the United States. It is a worldwide phenomenon with $300 billion in revenue last year, according to a report by consultancy Ovum Ltd. (London). This level is expected to jump to $462 billion by the end of 2001 and $601 billion by the end of 2003.
"The long-heralded slowdown in growth has still failed to materialize," says analyst Jeremy Green, the report's author. "The forecasts show that even in countries and regions with high mobile penetration, growth will remain strong. In countries where cellular is new, or where penetration has traditionally been relatively low, growth will be even stronger."
The worldwide surge in wireless revenue is already biting into fixed telephony revenue, the mainstay of telcos. The bite is expected to be so great, in fact, that mobile revenue will surpass fixed-line income by 2002. "Global fixed telephony revenue will decline from $529 billion in 2001 to $487 billion in 2005," says Richard Kee, another Ovum analyst. This drop represents an annual decline of 1.4 percent, compared to an annual increase of 16 percent in mobile telephony revenue. Combined they are expected to produce an annual 7 percent increase in worldwide telephony revenue, which would guarantee the industry's steady pulse.
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