Mobile Communications Surge but Revenues Stagnate

A leading analyst firm predicts that mobile connections will continue to burgeon but providers have to watch for potholes on the road to data-services Nirvana.

A new report predicts that worldwide mobile connections will reach $5.6 billion this year, while revenues from mobile data services will total some $314.7 billion.

That constitutes a significant jump of 22.5 percent from $257 billion in 2010, according to the report released by analyst firm Gartner, Thursday.

"Mobile data traffic will increase significantly as more people will have access to mobile data networks, there is a migration toward smartphones, and an increase in sales of media tablets," Jessica Ekholm, principal research analyst at Gartner, said in the research note.

Further, worldwide mobile connections will continue to grow at a steady pace through at least 2015, the forecast said, with connections reaching 7.4 billion by that time, and revenue predictions hitting $552 billion.

There are four phenomena driving that trend, according to Gartner: "growth in the number of mobile connections, increasing availability of higher-speed data-centric mobile networks, smartphones, and data-consuming content and applications."

In addition to the total number of connections growing, the research note said that Gartner also expects that mobile data usage per connection will increase -- and that there will be a shift in mobile users' perception of mobile data around the world, as data plans go from being seen as a luxury, to being considered a nice-to-have service, to finally being perceived as potentially essential.

However, Gartner analysts cautioned that there are also pitfalls that communication service providers (CSP) will need to watch out for, going forward.

"Data revenue will continue to grow but at a much slower rate, [which] is causing a decoupling between revenue and data traffic, and it is also creating an increase in network costs for carriers as they try to sustain growing data traffic," Ekholm said.

"What carriers currently need are innovative ways to increase data revenue while finding smart solutions to manage a growing demand in data," Sylvain Fabre, research director at Gartner, said in the research note.

Among the recommendations from the Gartner analysts is for CSPs to look at offering broader and more flexible pricing plans to customers.

"Ultimately, it will be the consumer who chooses the content he or she wants to use, and carriers need to ensure that the quality of experience is good. A substandard user experience may lead to higher churn," Fabre said.

Stuart J. Johnston is a contributing editor at, the news service of, the network for technology professionals. Follow him on Twitter @stuartj1000.

Tags: mobile, Gartner, data services

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