Mobile operators in the West face an industry contraction despite the growth of mobile data, according to a new report.
Analysis Mason predicts that mobile data traffic in Western Europe will grow at a CAGR of only 29 percent from 2012 to 2017, equivalent to a growth multiple of 3.6—the lowest rate of the eight world regions.
The report defies many industry forecasts, which have predicted a mobile data explosion over the next five years.
The expected growth will be tempered by tiered pricing, device saturation, delays in the availability of 4G and, most significantly, a consumer preference for WiFi.
Regarding this trend, the report’s author, AM’s Rupert Wood, said: “Fixed and WiFi can do most of what mobile does (except the wide-area/mobility bit) at a fraction of the price to the end user, but mobile can do only a fraction of what fixed and WiFi can because of its inherently limited capacity.
“Mobile operators in developed economies are going to have to get used to being the victims, not the perpetrators, of disruptive substitution.”
Wood added that speculative forecasts of explosive growth rates cannot translate into any “plausible” increase in operator revenue.
The report advises mobile operators to prepare instead for an industry contraction.
The contraction may be compounded by the loss of core voice and messaging revenue to OTT players, some erosion of operators’ position in device distribution, and a predicted fall in network costs.
Wood explained: “In an uncompetitive market, falling costs would lead to rising margins, but in a mature, competitive market such as Western Europe they result in a contracting business.”
Elsewhere, the report’s forecast for mobile data traffic varied, with the growth multiple in the Asia-Pacific and Latin America at 9.1 and 6.8 respectively, but only at 4.5 in America.