U.S. Wireless Data Market, Q1 2009

1Executive Summary

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The U.S. wireless data market grew 5 percent quarter over quarter and 32 percent from first quarter 2008 to reach $10 billion in mobile data service revenues. It marked the first time the U.S .market has achieved the $10 billion milestone. Given the strong growth in data revenues shown by the top carriers and the increase in service revenues overall, it appears that (at least for the time being) the worst is over for the mobile industry. In summary, the recession has been all but a tiny blip (from the service revenue perspective) in its growth trend and the U.S. mobile market has weathered the downward spiral in the economy better than its counterparts in other developing nations.

U.S. subscription penetration went past 90 percent. While the flailing economy hit certain segments of the wireless ecosystem hard, especially the infrastructure and handset segments, consumers haven’t really pulled back on mobile data spending. Additionally, capital expenditures will stay strong in 2009 given the activity around 3G/4G deployments and trials. As expected, data card subscriptions were hit the hardest, and there was an increase of prepaid subscribers, which dropped the overall revenues for some of the carriers.

As we mentioned in our last research note, the fate of the U.S. mobile industry is more closely tied to the overall economy than it was during previous recessions. As consumer sentiment has improved over the last couple of months, along with better-than-expected first quarter 2009 earnings from corporations, the mobile industry seems to be back on track. While the structural flaws in various industry segments remain, and the economy is a crisis away from the double dip, the outlook for the remainder of 2009 remains bright, and we are now expecting overall data revenues to increase by 24 percent compared to 2008.

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