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Increased demand in mobile data services predicted
Posted: 20-Jul-2004 [Source: A.T. Kearney]

[41 percent of global wireless phone users expect to use mobile data services daily within the next year according to a new study from A.T. Kearney/Cambridge University Mobinet Study.]

Chicago, IL -- Consumer wireless data services is accelerating rapidly throughout the world as advanced multimedia phones find their way into more users' hands, according to the latest Mobinet study of 4,500 mobile phone users in 13 countries conducted regularly by global management consulting firm A.T. Kearney and the Judge Institute of Management of Cambridge University.

At the same time, however, wireless users are expressing greater concerns about security and privacy, pricing and slow network speeds that must be addressed before the increased interest in wireless data services translates to profitable revenue growth for operators.

The latest Mobinet study reports 41 percent of global wireless phone users expect to be regular or heavy users of data services by 2005. The index looks at current and planned usage of wireless data services such as mobile e-mail, games, music downloads, photo messaging or news updates. The reported surge in user demand represents a four-fold increase in the past year and shows that these new services have reached a "tipping point" in terms of mass-market levels of customer interest and acceptance.

Driving the increase are two factors. First, the number of global wireless users with multimedia phones increased to 49 percent. Second, adoption of key data services has moved past experimentation to achieve penetration rates above 25 percent among target customer segments.

"We are seeing huge growth and customer acceptance of wireless data services, particularly in Asia and among users under age 25," said Mark Page, A.T. Kearney vice president and leader of the study. "People have experimented with these services, find they like and value them, and are planning to use them more in the future. The industry has succeeded in enthusing the market, but clear challenges remain with respect to peoples' comfort level with using the technology more and paying higher bills."

When asked their reasons for not using mobile data services more frequently today, 35 percent of data service users cited cost and 18 percent named slow network access. While these percentages were similar to last year's Mobinet, the number of users also citing security and privacy concerns rose to 22 percent from just 10 percent last year.

Rising security concerns have the potential to thwart increased use of mobile payment systems just as wireless users are showing more interest in them. Ten percent of wireless users surveyed say they buy services via their mobile phone bill regularly, up from three percent in the last Mobinet.

"Mobile operators still have a lot of work to do to attain the intense usage that drives substantial revenue growth," Page said. "Secure technology together with improved pricing strategies and business models are needed to allow operators to capture value from emerging demand, rather than losing that value to third-party companies as happened with the billion-dollar European ringtone business."

Among the wireless data services experiencing the fastest growth worldwide are:

-- Photo messaging. More than one-in-five users globally have a camera phone and 53 percent of those say they use it at least once a month to send or receive photo messages. Overall, consumer use of photo messaging has tripled over the last year.

-- Entertainment. The number of multimedia phone users downloading and playing music on their mobile phones has nearly tripled in the last year to 21 percent. Some popular entertainment services such as game and music downloads are already being used by one-third of users under age 25.

-- Information services. The number of wireless phone owners using their phones to gather information such as news, weather, sports and stock quotes has jumped nearly four-fold from six percent in 2003 to 25 percent this year.

Mobile data usage has moved beyond teens and young adults and into age categories with more disposable income: 48 percent of 35-44 year old camera phone users reported they use photo messaging and 66 percent use text messaging. Japan is the leading country in mobile data usage, followed by South Korea and Australia, with Germany the leading European country.

The Mobinet data show a clear correlation between heavy text messaging use today and demand for heavy photo messaging use in the future. Operators who can get camera phones into the hands of their most active text messaging customers will realize the payoff from this higher revenue service.

"Wireless data services are clearly approaching mass market acceptance in many countries, regardless of the technology standard deployed," said Simon Bell, a professor at the Judge Institute of Management, Cambridge University. "But as technology evolves and more people use wireless data in new ways, their sensitivity to possible security issues increases."

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