US expected to pass 250 million connections by Q4 2007

US cellular market shows steady growth

For immediate release, 22 May 2007. The US cellular market grew at a steady pace in 2006, adding around 18 million connections year on year, reveals Wireless Intelligence - the joint venture between Ovum and the GSM Association.

"By Q4 2007, the US is expected to pass the 250 million connections mark. With a level of penetration set around 80%, the market is showing healthy signs of growth," says Joss Gillet, Senior Analyst at Wireless Intelligence. Verizon Wireless is catching up on AT&T's market share, set at 26% in Q4 2006. In contrast, Sprint's market share seems to have been stagnant since Q2 last year.

Figure 1 US: 2006 cellular connections growth, top five operators

Rank	Operator	Country	Growth
1	Leap Wireless	US	33.66%
2	Sprint USA	US	16.42%
3	T-Mobile	US	15.44%
4	Verizon Wireless	US	15.03%
5	AT&T	US	12.59%

Source: Wireless Intelligence

In 2006, the US cellular market reached 232 million connections and is expected to grow by 9% this year to add around 20 million connections in 12 months. With a penetration rate set at 80% in Q4 2006 and a very high level of average voice minutes, the real phenomenon to watch in the US is the increase in data revenues.

Between Q1 2006 and Q1 2007, major carriers have seen their non-voice ARPU increase by 30-60%. This growth is driven by the fast adoption of CDMA2000 1XEV-DO and WCDMA services. "As carriers expand their network coverage, good handsets become widely available and data services become widespread, end users now have at least three good reasons to use high-speed connections on their mobile," says Gillet.

AT&T is expanding its WCDMA network, which today represents less than 5% of its total connections. With the HSDPA upgrade, the operator can expect a fast migration of its GSM installed base to WCDMA/HSDPA. We forecast that AT&T's WCDMA/HSDPA subscriber base could represent around 30% of its total connections by the end of 2010. Three years ago Verizon Wireless launched what appears to be the most mature EV-DO network today and represents 28% of its installed base. The deployment of EV-DO Revision A will boost the consumption of data traffic even more.

Finally, the phenomenon of multiple SIMs per user is distorting the overall non-voice ARPU trend. "With a fast-growing prepay installed base and consumers using more than one device, the reality is that market penetration is overstated as we are, in effect, measuring average revenue per SIM. The growth of average revenue per real user is understated," concludes Gillet.

- Ends -

About Wireless Intelligence

Wireless Intelligence is a venture between Ovum and the GSM Association. It is also endorsed by the CDMA Development Group (CDG). At the heart of its activities is a comprehensive database on the global mobile market. It currently contains 1,100,000 individual data points drawn from 670 operators in 221 countries, across all mobile technologies. Through a unique partnership the majority of the world's operators have access to the database for validation and contribution.

While Wireless Intelligence is able to draw on the combined strengths of its parent organisations, it acts as a separate entity to ensure absolute confidentiality and independence.

About Ovum

Ovum's primary activity is providing value-added advisory services and consulting to retained and project clients. The company acts as a well-respected and trusted source of industry data, knowledge and expertise on the commercial impact of technology, regulatory and market changes. Ovum engages in continuous research and industry analysis to determine market dynamics in its specialist sectors.

Ovum has developed long-standing relationships with many of its corporate clients, which include major international blue-chip companies such as Alcatel-Lucent, AT&T, BT, Cable & Wireless, Cisco Systems, Deutsche Telekom, Fujitsu, HP, IBM, Microsoft, Telstra and Vodafone.

Ovum is part of the Datamonitor Group.

About the GSM Association

The GSM Association (GSMA) is the global trade association representing over 600 GSM mobile phone operators across the world. In addition, more than 150 manufacturers and suppliers support the Association's initiatives as key partners. The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers and national economies, while creating new business opportunities for operators and their suppliers. The Association's members serve more than 2 billion customers - 78% of the world's mobile phone users.

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