New Study Highlights Growth of Data and Prepaid Plans

New Study Highlights Growth of Data and Prepaid Plans

A survey just released by the U.S. industry group CTIA-The Wireless Association shows that mobile service providers in the United States increased their annual network investments from $25.3 billion in 2011 to $30.1 billion in 2012, up 19 percent. At year-end 2012, mobile subscriber connections reached 326.4 million with pre-paid/pay-as-you-go plans accounting for 76.4 million or 23.4 percent of the total – reflecting a gain of almost seven percent year-over-year. Data traffic was up an impressive 69.3 percent, while minutes of use (voice) and SMS were up 0.2 percent and down 4.9 percent, respectively. MMS use grew by a healthy 41 percent from the previous year.

Tarifica’s Take

Aside from the relatively large increase in capital spending, two things in particular struck us about this industry study. First is the fact that data traffic was up nearly 70 percent, a truly stunning rise and further evidence that customers’ modes of using mobile devices are undergoing a sea change. That conclusion is backed up by the statistics regarding voice, SMS and MMS. Voice was flat, with minutes of use rising by just a fraction of a percent, while SMS texting was down by almost 5 percent. On the other hand, MMS, a rich format for messaging that supports the sending of images and other multimedia uses (a form of data), jumped by 41 percent. What we are seeing is a world transitioning rapidly from the consumption of old line voice and text services to newer data services and mobile providers everywhere will have to continue to make large, ongoing investments if they are to maintain viable competitive networks capable of carrying an exploding amount of data traffic.

Second, we were struck by the fact that pay-as-you-go and prepaid users are now almost a quarter of the U.S. subscriber base. We expect the figures are even higher in other parts of the developed world. Prepaid is clearly no longer just for low-end subscribers but is spreading among more mainstream smartphone users who consume significant amounts of data but who want to gain greater control over their monthly expenditures. We see this trend continuing in 2013 and beyond.