Global Wireless Telecommunications Carriers PDF

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February 2016
IBISWorld Industry Report
Global Wireless
Telecommunications Carriers
Global Wireless Telecommunications Carriers
February 2016
Industry Definition .........................................2

Main Activities ...............................................2
Similar Industries ..........................................2
Additional Resources ....................................3
Key Success Factors ................................... 18

Cost Structure Benchmarks ......................... 19
Basis of Competition .................................... 21
Barriers to Entry ........................................... 22
Industry Globalization .................................. 23
Industry Performance .............................. 4
Major Companies .................................... 24
Executive Summary ......................................4

Key External Drivers .....................................4
Current Performance ....................................5
Industry Outlook............................................7
Industry Life Cycle ........................................9
China Mobile Limited ................................... 24

Verizon Communications Inc. ...................... 25
Other Players ............................................... 26
About This Industry ................................. 2
Products & Markets ................................. 10

Supply Chain ................................................10
Products & Services .....................................11
Demand Determinants ..................................13
Major Markets ...............................................13
International Trade........................................14
Business Locations .......................................15
Competitive Landscape ........................... 18

Market Share Concentration .........................18
Operating Conditions .............................. 28

Capital Intensity ........................................... 28
Technology & Systems ................................ 28
Revenue Volatility ........................................ 31
Regulation & Policy ...................................... 31
Industry Assistance ...................................... 32
Key Statistics ........................................... 33

Industry Data................................................ 33
Annual Change ............................................ 33
Key Ratios.................................................... 34
Jargon .......................................................... 34
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About This Industry

Industry Definition
Companies in this industry operate and maintain switching and transmission facilities to provide direct
communications via wireless radio transmission. Wireless services include cellular voice telephony
services, messaging services, broadband data services and mobile backhaul services (i.e. transferring data
from small subnetworks to a network core). Carriers may also retail mobile handsets and related
equipment to consumers. The industry does not include mobile virtual network operators.
Main Activities
The primary activities of this industry are:
Providing mobile backhaul services
Providing mobile data services
Providing mobile messaging services
Providing voice telephony services
Retailing handsets and associated equipment
The major products and services in this industry are:
Voice telephony
Data services
Equipment
Messaging
Other
Similar Industries
C2523-GL - Global Computer Hardware Manufacturing
Computer hardware manufacturers produce and assemble desktop and laptop computers, computer
storage devices, computer terminals and computer peripherals.
C2524-GL - Global Semiconductor & Electronic Parts Manufacturing
This industry manufactures electronic components, typically packaged in a discrete form with two or more
connecting leads or metallic pads.
I5112-GL - Global Wired Telecommunication Carriers
This industry provides customers with voice telephony services using primarily wired infrastructure.
I5121-GL - Global Internet Service Providers
This industry provides customers with wired internet access.
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Additional Resources
For additional information on this industry:
www.itu.int
International Telecommunication Union
www.gsma.com
GSMA
www.openmobilealliance.org
Open Mobile Alliance
www.ctia.org
CTIA the Wireless Association
February 2016
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February 2016
Industry Performance
Executive Summary
In the past five years, wireless communications have become essential to the day-to-day lives of the world's
consumers. As a result, demand for the industry has surged, with revenue increasing accordingly. Over the
five years to 2016, revenue is expected to grow an annualized 4.3% to $1.7 trillion. Industry operators have
adopted two primary strategies to grow revenue, expanding subscriber numbers and increasing average
revenue per user (ARPU).
The overwhelming majority of new wireless subscriptions over the past five years have emanated from
emerging markets. There are now over a billion mobile subscribers in China, while India is anticipated to
have surpassed that mark in 2015. The rapid increase in subscribers from these markets is expected to help
increase global industry revenue 2.3% in 2016. In contrast, markets in developed economies have reached
saturation, with penetration surpassing 121.0% in 2014, preventing wireless carriers in these markets from
achieving the subscriber growth rates of their counterparts in emerging economies. Instead, carriers in
developed economies have focused heavily on expanding ARPU by providing more expensive mobile data
services. Demand for these services has exploded over the past five years, as there has been widespread
proliferation of smartphones and tablets. The explosion of data traffic is expected to give industry revenue
an additional boost.
Revenue growth is expected to slow slightly over the five years to 2021, with revenue forecast to grow 2.7%
per year on average to $1.9 trillion. This growth will likely be driven by the ongoing rollout of fourthgeneration networks, which provide the fastest data-transfer speeds available. Meanwhile, spectrum
shortages in developed economies will continue to encourage consolidation while emerging markets near
saturation over the next five years, enticing carriers to steer their efforts toward expanding ARPU. The
spectrum shortage is also expected to encourage the development of new small cells, Distributed Antenna
Systems (DAS) and other network equipment to densify existing carrier networks. While the purchasing
power of consumers in emerging regions will not likely grow to rival that of consumers in developed
economies, even a small increase in ARPU in these enormous markets would have a significant effect on
the industry.
Key External Drivers

The key sensitivities affecting the performance of the Global Wireless Telecommunications Carriers
industry include:
GDP of the BRIC nations
While subscriber growth rates in the developed world have been slowing, growth rates in many emerging
economies have exploded. In particular, India and China represent markets with significant growth
potential for the industry. These countries represent a greater percentage of subscribers than their
proportion of global wireless revenue, indicating an opportunity for industry operators to expand revenue
by increasing the average revenue per user (ARPU) in these markets. As these countries' GDPs grow, so
does the purchasing power of their consumers, driving adoption of higher-margin, value-added services.
GDP growth for these nations is expected to increase in 2016, representing an opportunity for the industry.
Global consumer spending
As wireless telephony has cemented itself as consumers' preferred method of voice communication in most
markets, decreases in consumer spending do not significantly erode demand for industry services.
However, consumer spending trends directly influence the extent to which consumers demand and adopt
more expensive, higher-margin wireless services. When consumer spending increases, industry operators
are better able to market a range of value-added services that boost revenue and profit. Global consumer
spending is expected to increase through 2016.
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Global population
The size of the global population ultimately determines the size of the market in which industry companies
operate. Although the number of subscriptions is not tied entirely to the size of the population (many
people have more than one mobile subscription), a growing population, particularly in urban areas, still
increases the number of potential wireless subscribers. The global population is expected to increase slowly
in 2016.
Global unemployment rate
High unemployment rates hamper per capita disposable income levels, leading to decreased demand for
many of the industry's services. In particular, European carriers suffered due to the region's ongoing
economic downturn. This region has a relatively high ARPU and share of industry revenue compared with
its share of the global population. Although the global unemployment rate is expected to remain stagnant
through 2016, widespread economic uncertainty continues to pose a threat to the industry.
Current Performance
The Global Wireless Telecommunications Carriers industry has grown rapidly over the past five years. The
number of wireless applications has increased considerably, making the cell phone an even more
important personal and business tool. This increasing utility has propelled demand for wireless services in
developed economies, while growing disposable incomes and greater accessibility to wireless services, such
as voice and short message service, have boosted demand from emerging economies. Meanwhile, the priceeroding effects of increased competition have facilitated growing demand for industry services in both
markets. As a result, industry revenue is expected to expand over the five years to 2016, growing 4.3% per
year on average to $1.7 trillion.
Surging subscriptions in emerging markets
Demand for wireless telecommunications services has surged in emerging economies over the past five
years. Consequently, the number of global mobile subscriptions has increased at an annualized rate of
6.0% over the past five years to 8.0 billion in 2016, based on data provided by the International
Telecommunication Union. This increase in subscriptions has led companies in this industry to hire more,
causing employment to rise at an annualized rate of 1.9% to 2.4 million workers in 2016. Specifically, the
booming economies of China and India have proven key growth areas for the industry. China had over a
billion mobile subscribers in 2013 and India is expected to have surpassed the mark sometime in 2015;
combined, the two countries are adding over 40.0 million subscribers every quarter, according to Ericsson,
a worldwide provider of telecommunications equipment and services to mobile and fixed network
operators. The addition of new subscribers in developing markets is expected to drive revenue up 2.3% in
2016.
While subscriber growth in emerging markets has skyrocketed over the past five years, revenue from these
regions has not grown at nearly the same rate. For example, China and India represent 27.0% of global
subscriptions, but only about 12.0% of industry revenue. This is because subscribers in these regions
primarily subscribe to older legacy networks that do not provide the high-margin services that carriers in
other regions have used to drive revenue growth. The low average revenue per user (ARPU) means that
these markets still have enormous growth potential for wireless carriers moving forward.
Competition in developed markets
Over the past five years, the defining characteristic of wireless telecommunications in the developed world
has been the rapidly increasing demand for mobile data services, driven by the widespread proliferation of
broadband-enabled smartphones and tablets. These services have markedly increased ARPU and
facilitated a range of new mobile services and applications that would not have been possible before the
implementation of advanced third-generation (3G) and fourth-generation (4G) networks. These highmargin services enable carriers in these regions to achieve high APRU. Therefore, in contrast to markets in
emerging economies, developed markets account for a disproportionately high share of revenue compared
with their share of subscribers. For example, even though the United States represents only 6.0% of global
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mobile subscriptions, the country accounts for about 27.0% of industry revenue, according to a report from
Chetan Sharma Consulting.
Developed economies are also characterized by a high level of wireless penetration, and thus saturated
markets. Companies in developed markets have had to spend heavily to attract and maintain subscribers
and reduce churn rates, which is the rate at which subscribers discontinue service in a given time period.
Many carriers in developed markets have also used generous handset subsidies to stimulate subscriber
growth and consumer adoption of smartphones. These phones offer greater functionality and boost
consumers' use of value-added services, which enhance carriers' profit margins. Such services include
multimedia messaging services, mobile e-mail, GPS, web browsing, m-commerce, mobile TV and internet
applications available for download. As use of these services has increased and fixed costs are spread over
an increasing number of subscribers, profitability has significantly increased.
The intense competition in a mature market has forced major players to establish competitive positions
from which to defend their subscriber base and market share. Economies of scale enable the major players
to obtain price advantages over their smaller competitors. Furthermore, these efficiencies mean the
dominant carriers have stronger cash flows, which give them the resources to invest heavily in new
technology, thereby protecting their subscriber base. As the importance of scale has increased,
consolidation has been abundant; major players in the developed world have acquired rivals big and small
in their quest for subscribers and spectrum (i.e. the airwaves over which carriers transmit). This trend is
expected to drive down the number of carriers in the industry at an annualized rate of 0.7% to about
789,000 companies in 2016. The increasing scarcity of spectrum in many developed markets will continue
to encourage consolidation.
Technological advances
The mass adoption of 3G technology over the past five years has underpinned the industry's transition
toward a data-centric environment in the developed world. The rapid growth in wireless broadband access,
an increase in internet protocol-based platforms and the digitization of content have blurred the lines
between communications, media and information technology (IT). Just as 3G technology facilitated a
range of new value-added services, the ongoing rollout of 4G networks is expected to do the same.
Most notably, the convergence of communications, media and IT has also meant that, although the
industry has expanded its product portfolio to include new media and information services, it is facing
competition from rivals outside of telecommunications. Cable companies, media content providers, web
search portals and software providers are seeking a bigger share of the communications market; in some
instances, these companies have launched their own wireless communications services.
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Industry Outlook
The Global Wireless Telecommunications Carriers industry will continue to exhibit strong growth over the
next five years. Industry revenue is forecast to expand 2.7% per year on average to $1.9 trillion in 2021. The
number of mobile subscriptions is forecast to grow at an annualized rate of 2.6% to 9.1 billion over the
same period, as companies in the developed world complete their rollout of fourth-generation (4G)
networks and emerging markets continue to increase subscriber numbers. In the next five years, fifthgeneration (5G) networks are also expected to take shape, with a significant chance of beginning operation.
As in the past five years, the majority of new subscribers are expected to come from emerging markets,
while the majority of high-margin data revenue is expected to come from developed markets. Nonetheless,
as consumer spending continues to grow in these regions, several emerging markets are poised for
increases in average revenue per user (ARPU) toward the end of the five-year period.
Competition and consolidation
In developing economies, carriers currently have one focus: to build the largest subscriber base that they
can. Once developing markets approach saturation, large operators will have a distinct advantage. With
more subscribers in their networks, they will benefit from significant economies of scale and will be able to
offer lower prices without sacrificing profit margins. As many emerging economies near saturation over the
next five years, these markets will likely experience heightened merger and acquisition activity, similar to
what carriers in developed markets have been experiencing in recent years. As a result, the number of
industry operators is projected to decrease at an annualized rate of 0.1% to about 784,000 companies. As
the cellular phone market approaches saturation, operators are expected to focus on increasing ARPU. The
availability of lower-priced smartphones has aided the switch from basic phones to smartphones in the
Asia-Pacific, the Middle East and Africa and is expected to increase ARPU in the coming five years.
On average, three national providers control over 90.0% of the market in most developed economies.
Therefore, carriers in these regions will continue to employ strategies that focus on retaining their current
subscribers. These may include arrangements with content providers for exclusive delivery of high valueadded content. Large carriers have begun to form alliances with content providers and media enterprises
to offer games, unique services and exclusive content to their networks. Since developed markets are
saturated and mobile-cellular penetration is expected to reach more than 120.0% by 2016, subscriber
growth in these markets will be minimal over the next five years. This suggests that revenue growth will
only be achieved through the provision and adoption of new, value-added data services. Additionally, as
carriers merge and acquire others, these companies will achieve economies of scale, enabling them to
expand their services. These expansions are expected to cause employment to grow at an annualized rate of
3.0% to 2.8 million workers in 2021.
Data explosion
For carriers, data services offer a valuable point of differentiation. Over the next five years, data usage is
anticipated to explode with the increasing penetration of 3G- and 4G-enabled smartphones and tablet
computers, as well as increased network coverage. It is also expected that 5G networks will be developed in
the coming five years, which, according to Chinese mobile company Huawei, will be 100 times faster than
the fastest 4G LTE standard currently available. According to a November 2015 Mobility Report by
telecommunications company Ericsson, more than 95.0% of North American mobile subscriptions will be
on the advanced 4G LTE network or higher (such as 5G) by 2021, while 80.0% of subscriptions in the AsiaPacific will be 3G or higher. The result of increasingly advanced network coverage and smartphone
penetration will be a surge in consumer adoption of high-margin data services, particularly within
developing markets. According to the same report, mobile data traffic is expected to increase an average
annual 45.0% between 2015 and 2021. Over this period, mobile data traffic is expected to increase by a
factor of seven in North America; 10 in the Asia-Pacific and Western Europe; and 12 in Central Europe, the
Middle East and Africa.
As mobile data subscriptions reach a majority of users, industry revenue will expand and more closely
follow the distribution of global subscribers. Companies that operate in major markets, such as China and
India, will benefit the most, as these markets currently account for 31.9% of mobile subscriptions. Even a
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small increase in ARPU in these countries, both of which are expected to have over a billion subscribers in
2016, would drastically increase the significance of these regions to industry revenue and performance.
Average industry profit is expected to expand over the next five years as ARPU in developing regions
increases, facilitated by increased adoption of data services.
However, the rapid increase in data use that is forecast to propel industry growth in the next five years may
also pose some problems for network operators. As the number of consumers using 3G and 4G services
increases, network bandwidth needs and, therefore, the need for substantial spectrum holdings, will
skyrocket. Any shortfalls in capacity will likely cause consumers to experience degradation of service
quality. Network operators will have to invest significant resources in improving network capacity or
implementing alternate delivery mechanisms to reduce constraints placed on their wireless networks. In
2014, the United States Federal Communications Commission voted to approve the accelerated
deployment of new wireless infrastructure. New small cells, Distributed Antenna Systems (DAS) and other
network equipment are expected to densify the networks of the carriers. Carriers operating in developed
economies, which have saturated markets, are expected to focus the coming five years on network
densification.
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Industry Life Cycle

This industry is in the mature stage of its life cycle.
Life Cycle Stage
Industry value added is growing at a slower rate than global GDP
The industry is consolidating
The number of mobile subscribers and average revenue per user (ARPU) continue to increase
In both developed and emerging markets, the Global Wireless Telecommunications Carriers industry is in
the mature phase of its lifecycle. Over the 10 years to 2021, industry value-added (IVA), which measures
the industry's contribution to the global economy, is expected to grow at an annualized rate of 4.0%, as
global GDP grows 3.6%. Although revenue is still growing in the developed world, growth rates are
gradually contracting as markets approach saturation. In contrast, the industry is experiencing doubledigit growth in emerging markets as subscriber numbers increase rapidly.
The industry is characterized by an extremely high rate of technological change and short technology life
cycles. Wireless communications technologies are constantly being improved and, with each improvement,
new value-added services are introduced. Once these services become widespread, network constraints
usually necessitate the introduction of a new network technology, which will in turn spur the introduction
of even more value-added services. This perpetual cycle has accelerated the rate of technological change in
the industry over the past 10 years.
The introduction of 3G network technology, for example, facilitated the provision of an array of mobile
data services such as mobile e-mail and multimedia messaging services. This, in turn, led carriers to
introduce upgraded 3G network technologies, such as the high-speed downlink packet access protocol,
which allow for faster data transmissions. Faster data transmissions have led to even more bandwidthintensive mobile applications, such as streaming music and video-on-demand, which are the major drivers
behind carriers' ongoing rollout of 4G network technologies throughout most of the developed world.
Although the rate of subscriber growth in most developed countries has slowed, it continues to rise as
mobility and constant connectivity become increasingly desired aspects of today's work and social
environment. In emerging economies, the level of wireless penetration is still relatively low, which is
driving large year-on-year gains in subscriber numbers and, therefore, revenue. As mobile penetration
levels in the developing world increase, the next stage of growth for the industry will come from providing
these subscribers with value-added services with increased ARPU.
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Products & Markets

Supply Chain
Key Buying Industries
I-GL - Global Telecommunications
Telecommunications resellers are key customers of wireless companies. Resellers purchase wireless
network capacity at wholesale rates and then on-sell wireless services to consumers.
Z01 - Global Consumers
The end users of wireless telecommunication services are businesses and consumers.
Key Selling Industries
C-GL - Global Manufacturing
A number of manufacturing industries supply infrastructure, equipment and handsets for the provision of
wireless telecommunication services.
C2524-GL - Global Semiconductor & Electronic Parts Manufacturing
This industry manufactures electronic components, which are typically packaged in a discrete form with
two or more connecting leads or metallic pads.
10
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Products & Services

Data services
16.0%
Equipment
13.0%
Messaging
12.0%
Other
11.0%
Voice telephony
48.0%
Over the past five years, the industry has shifted away from its traditional product (i.e. voice telephony)
toward high-margin data services. While this shift is much more prominent in the developed world, data
services are expected to increasingly cement themselves as the industry's main product moving forward.
Indeed, fourth-generation (4G) networks are IP-based networks, on which data is organized and
transmitted in packets, and will eventually make no distinction between voice and data transmission.
Voice telephony
Voice telephony services account for 48.0% of revenue. These services have declined as a percentage of
revenue over the past five years as messaging services, data services and external competitors, such as
voice-over-internet-protocol (VoIP) providers, have decreased demand for traditional wireless voice
telephony services. Some operators have attempted to mitigate the threat of external competition by
launching their own VoIP applications or partnering with VoIP providers and charging them a monthly fee.
Decreasing demand for this product segment is most evident in the developed world, with Japan and the
United States leading in adoption of mobile data services. Notably, voice telephony is still the primary
product of industry operators in developing economies; however, these companies generate far less
revenue than their counterparts in the developed world. Moving forward, this segment is expected to
continue to decline in prominence as a greater portion of voice traffic will be transmitted as data over
internet-protocol-based 4G networks.
Other data services
Other data services (not including messaging) account for 16.0% of revenue. This product segment has
expanded markedly as a percentage of revenue over the past five years as broadband-enabled smartphones
and tablets have proliferated through much of the developed world. In 2011, nonmessaging data services
made up the majority (53.0%) of overall global data revenue for the first time, according to Chetan Sharma
Consulting.
Because smartphone users typically pay twice the amount of t voice-only subscribers, growth in data
services translates into significant increases in industry revenue. However, smartphone users consume 35
times more data than a typical phone user, according to Deloitte, which has placed significant capacity
constraints on operators' networks. Thus, the increasing prominence of this product segment has both
boosted revenue and spurred industry operators to invest heavily in implementing and expanding their
network capacity and coverage. Moving forward, industry operators are expected to increasingly
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implement tiered data plans that charge users based on how much data they consumer in a given month;
this pricing approach mitigates the adverse effect of a small proportion of users consuming the majority of
a network's bandwidth.
Messaging
Mobile messaging, often referred to as a text message or short message service (SMS), uses standardized
communications protocols to exchange short messages between mobile devices. While these services have
evolved considerably since their inception to include the transmission of images, video and audio content,
they represent the original data service provided by the industry. These services are available to about
78.0% of all mobile phone subscribers. In recent years, messaging-service growth has been pressured by
the increasing prominence of IP-based messaging applications that provide a similar service (e.g.
WhatsApp). Carriers have partially mitigated this threat through partnerships with existing applications or
by launching their own IP messaging applications; nevertheless, due to external competition this product
has declined as a percentage of revenue over the past five years. Messaging services account for an
estimated 12.0% of revenue.
Equipment
Equipment sales generate about 13.0% of revenue. The price of handsets in the developed world has
increased dramatically over the past five years; however, many companies heavily subsidize the cost of
these devices, moderating this product segment's increase as a percentage of revenue. Industry operators
also retail associated equipment such as femtocells, which are small, low-power cellular base stations that
boost cell signals and are designed for residential use.
Other
Other services account for 11.0% of revenue and include roaming and paging services and mobile backhaul
services. Growth in roaming revenue is largely dependent on the number of foreign travelers who require
wireless services while out of their home country. Backhaul services involve the transmission of signals
from an edge network to a core network and may be provided to other telecommunications carriers as a
means to lessen network congestion. Demand for these services has been driven by a historically high
growth in mobile data traffic. As this trend continues, demand for these services is expected to increase
markedly.
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Demand Determinants
Consumer demand for wireless services is influenced by population and household income growth. The
size of the population determines the size of the industry's market, and per capita disposable income levels
determine consumers' ability to purchase wireless services.
New technologies, such as variations of third-generation (3G) and emerging fourth-generation (4G)
networks, are generating additional data revenue in developed economies and increasing demand for the
industry. These technologies have facilitated new value-added services including the mobile e-mail, music
downloads and mobile TV feeds. In the future, a plethora of new value-added services offered over 4G
networks will continue to drive demand for wireless services.
However, technological advancement and the mass adoption of new services can also siphon demand for
the industry's more traditional services. For example, the introduction of mobile messaging decreased the
number of calls made. Similarly, e-mail applications are placing pressure on messaging, while the
emergence of mobile voice-over-internet-protocol (VoIP) services (which are only feasible over upgraded
3G and new 4G networks) has further undermined voice revenue. This competitive threat may become
more pronounced as mobile VoIP becomes available in more markets. Nevertheless, the traditional mobile
voice market continues to drive demand for the industry in the developing world, as the majority of
consumers in these regions cannot afford expensive smartphones.
Price is an important demand determinant for this industry as consumers are very price-sensitive,
particularly in developing markets. Indeed, consumer adoption of new technologies is particularly sensitive
to price; if the price is too high, the new service will likely remain a niche product that does not gain mass
acceptance. However, once the price of a new service reaches an acceptable level, demand can explode.
Innovative packaging and marketing structures can stimulate demand. For example, bundling services (i.e.
cross-selling) is a means through which integrated telecommunication companies can leverage their
subscriber base and boost overall use. One key marketing promotion that continues to influence the
industry is the use of price caps, which give users a high dollar-value of calls for a set amount.
Major Markets
Prepaid subscribers
Prepaid subscribers
77.0%
Postpaid subscribers
23.0%
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Prepaid services typically attract price-sensitive consumers who will often switch services if a more
attractive option becomes available. As a result, prepaid services tend to dominate developing economies,
which are booming and driving the growth in global subscribers. Many consumers have multiple SIM
cards, which enables them to alternate between different providers and take advantage of promotional
rates. European countries also have higher share of prepaid subscribers relative to the global average.
Postpaid subscribers
Postpaid subscribers typically generate higher average revenue per user than prepaid subscribers. In many
instances, the share of postpaid subscribers is higher in more developed economies. For example, the
United States has a high share of postpaid subscribers, with the two leading wireless providers, AT&T and
Verizon, having in excess of 75.0% of their subscribers on postpaid plans. In recent years, however, prepaid
subscriber growth has outweighed postpaid subscriber growth, even in developed economies like the
United States. This is primarily due to an increasing number of consumers preferring to avoid long-term
contracts.
International Trade
Exports in this industry are low and steady.
Imports in this industry are low and steady.
The industry has no tangible level of international trade. Typically, providers service their own domestic
market; however, service trade does occur in the form of international roaming when a wireless device is
connected to a third party's network in another country. The caller must ultimately pay to connect and
terminate on another network. Most consumers and businesses use wireline telecommunications or
services offered over internet protocol networks to call overseas. Indeed, voice over internet protocol is a
technology that is rapidly increasing its share of the long-distance and international call market.
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Business Locations
Region
North America
31.0
Africa & Middle East
19.0
Europe
18.7
South America
10.9
North Asia
7.6
India & Central Asia
5.2
Oceania
5.0
South East Asia
2.6
Region
North America
%
5.7
Africa & Middle East
16.5
Europe
13.3
South America
9.7
North Asia
26.8
India & Central Asia
18.3
Oceania
0.6
South East Asia
9.1
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According to the International Telecommunication Union (ITU), in 2014, developing economies are
expected to account for about 78.0% of mobile-cellular subscriptions, while developed economies account
for a mere 22.0%. The number of mobile subscriptions worldwide is approaching the number of people on
Earth, with developed economies averaging 121 mobile subscriptions per 100 inhabitants and developing
economies averaging 90 subscriptions per 100 inhabitants. The strongest mobile subscription growth is
currently occurring in Africa and Asia and the Pacific, with penetration expected to reach 69.3% and
89.2%, respectively.
Meanwhile, global average revenue per user (ARPU) rate has steadily declined, reflecting falling tariff
prices as well as the popularity of multi-SIM in developed markets and that of lower income segments in
developing economies. In North America and Europe, fierce competition has caused a reduction in prices.
Nevertheless, growth in data consumption outweighed declines in revenue per subscriber, growing it
between 1.0% and 2.0%.
Europe
Although Europe is the industry's largest geographic market, this region has decreased in prominence over
the past five years as regional subscriber growth has lagged that of other regions. Moreover, many
European countries continue to be pressured by the ongoing European sovereign debt crisis. This has led
to decreasing ARPU (offset by increasing data usage) in this region and caused carriers that operate
primarily in this region (e.g. Vodafone) to lag behind the performance of the industry as a whole.
Nevertheless, Europe's revenue share is still well above its share of population and subscribers. This
indicates that wireless penetration and average monthly spending in this region are well above the global
average, reflecting European consumers' relatively high purchasing power compared to other regions.
North America
North America is the region with the highest average revenue per subscriber, which primarily reflects the
market dominance of the United States. Indeed, although the United States represents only about 5.0% of
global mobile subscriptions, it represents about 30.0% of global wireless revenue. Carriers in the United
States enjoy high ARPU due to US consumers' purchasing power and the widespread prominence of
broadband-enabled smartphones; indeed, smartphone sales in the United States currently represent more
than two-thirds of all handsets, compared with about one-fourth in the global market.
While the United States is the largest market in North America, Mexico is the fastest-growing. The United
States is home to two of the largest wireless carriers (Verizon and AT&T), and Mexico is home to one of the
fastest-growing global telecommunications carriers, America Movil. Nevertheless, North America's share
of revenue and subscribers has declined over the past five years as the mature region has struggled to keep
pace with rapidly expanding markets in developing regions.
North Asia
North Asia is a dominant force in the global wireless telecommunications market. This region is home to
the mobile technology leader, Japan, and the industry's largest market, China. Japanese mobile operators
offer an extensive range of data services that have made mobile telephony an integral part of many day-today activities; this, in turn, has boosted carriers' ARPU. Indeed, according to Chetan Sharma Consulting,
60.0% of Japanese carriers' ARPU is generated through data services. Chinese mobile subscribers, in
contrast, are highly price-sensitive, and many own more than one SIM card to take advantage of various
call offers and packages. As a result, even though China accounts for the majority of all mobile
subscriptions, it accounts for less than 10.0% of industry revenue.
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South America
The South America region represents an emerging market for the industry. In particular, the emerging
economy of Brazil, the region's largest country, has presented opportunities for industry operators. Mobile
infrastructure has expanded more rapidly in Brazil compared with other countries in the region, as Brazil
rapidly upgraded its infrastructure in preparation for the 2014 World Cup and continues to do so for the
2016 Olympics.
India and Central Asia
While the India and Central Asia region does not yet account for a significant portion of industry revenue,
it has the second-largest share of mobile subscribers, making it a region with significant growth potential
for the industry. According to the GSMA, India is the fourth largest smartphone market globally, trailing
China, the United States and Brazil. However, carriers in the country garner a dismal ARPU. As the Indian
market matures and next-generation networks are rolled out, a minor increase in ARPU across such a vast
subscriber base could instantly transform the region into one of the industry's most prominent markets.
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Competitive Landscape
Market Share Concentration
Industry concentration is low.
In contrast to domestic markets, which typically exhibit a high level of concentration, the Global Wireless
Telecommunications Carriers industry has a low level of concentration. This can be attributed to large
players dominating a country or a geographic region, but not having a major global presence. Over the next
five years, companies with extensive operations in the emerging markets of South America, India and
China are expected to significantly increase their market share. These countries and regions are
characterized by high wireless penetration, but low average revenue per user (ARPU). Consequently, as the
purchasing power of consumers in these regions grows and carriers offer more value-added services,
particularly data services, ARPU and, thus, revenue and market share, are expected to grow. At the same
time, the competitive intensity in the industry, particularly in saturated markets in North America and
Europe, will likely lead to increased consolidation among players over the next five years. As a result of
these factors, market share concentration is expected to increase over the next five years.
Key Success Factors

The key success factors in the Global Wireless Telecommunications Carriers industry are:
Economies of scale
Economies of scale are critical to success in the high fixed-cost wireless business. Spreading a large
depreciation expense over a sizable subscriber base enables carriers to competitively price their services
and win subscribers.
Ability to quickly adopt new technology
There is a high rate of technological change in the industry. Operators must bring new products and
services to market quickly to differentiate their services.
Development of margin enhancing services
The traditional business of wireless telecommunications - voice telephony - is becoming a low-growth, lowmargin service. Operators must bring to market new value-added services if they are to arrest margin
decay and reduce subscriber churn.
Having links with key suppliers
Industry operators must develop strategic alliances with key suppliers such as handset manufacturers,
network equipment manufacturers and software developers. Doing so enables a carrier to be first to
market with service-enhancing innovations.
Use an appropriate pricing policy
The overwhelming majority of consumers are price sensitive. Therefore, it is important for carriers to
competitively price service charges, plan limits and handsets if they are to grow subscriber numbers and
reduce churn.
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Cost Structure Benchmarks
Purchases
37.5%
Depreciation
12.9%
Wages
8.1%
Rent & Utilities
4.2%
Marketing
2.8%
Other
13.3%
Profit
21.2%
The cost structure of the industry represents a globalized weighted average of individual company's cost
structures. Notably, regional cost structures may vary significantly, particularly in terms of cost of services,
profitability and wages. In general, industry operators in the developed world face different trends than
those in the developing world; this translates into different cost pressures and, thus, different trends in
companies' cost structures.
Profit
Industry profit, defined as earnings before interest and taxes, accounts for about 21.2% of revenue, on
average. In general, industry companies have high margins because once the high fixed costs of
implementing a network are spread over a sizeable subscriber base, profit expands rapidly with each
additional subscriber added. Overall profit has thus increased over the past five years. In the developed
world, profit has expanded as carriers have continued to add subscribers and introduced higher-margin
data services; however, growth has been moderated by heightened, ongoing capital expenditures
associated with the implementation and expansion of third- and-fourth generation networks (which
facilitate the provisioning of these higher-margin services). Additionally, while the proliferation of
smartphones and tablets has been the driving factor behind consumer demand for data services, they have
hurt the short-term profitability of carriers that subsidize the cost of these devices, such as companies in
the United States.
In the developing world, profit growth has been driven by the rapid addition of wireless subscribers.
Consumers in these regions are very price sensitive and smartphone penetration in developing countries is
extremely low; consequently, carriers that operate in these regions lack the margin boost provided by
consumer adoption of data services. However, companies in developing regions also have much lower
operational costs in terms of wages and capital expense. Because voice telephony is still the primary service
demanded in these markets, carriers can survive and even thrive with older, legacy network infrastructure.
Purchases
Purchases constitute the largest cost for wireless operators, absorbing 37.5% of revenue. Purchases include
networking equipment, wholesale network access, termination charges and equipment purchases and
subsidies. The costs of these items as a percentage of revenue vary by country, as the industry has differing
regulations and is at a different stage in its life cycle depending on the country or region in which
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companies operate. For example, carriers in developed economies have much higher handset costs due to
widespread consumer demand for smartphones. These costs are even higher for carriers that offer handset
subsidies as an incentive to lock customers into long-term, higher-revenue postpaid contracts. On the
other hand, industry operators in developing markets face much lower handset costs and operate older,
legacy networks, which decreases the amount of new equipment purchased.
Wages
Although the industry is capital intensive, companies still require a skilled labor force to install and
maintain equipment, design networks and operate services. Over the past five years, many carriers have
looked to improve operational efficiencies by reducing wage expenses. Indeed, there have been numerous
mergers and acquisitions in developed markets to increase scale. Nevertheless, wages are expected to
continue to increase over the next five years as companies hire more technicians amid ongoing fourthgeneration (4G) network rollouts. However, revenue is expected to expand much more rapidly than wages
as more subscribers upgrade to higher-margin plans a trend that boosts revenue but requires little
additional maintenance or sales personnel. Consequently, wages as a percentage of revenue are expected to
continue to decrease over the next five years. Wages account for an estimated 8.1% of revenue in 2016.
Depreciation
Depreciation charges incurred by mobile network operators are significant due to industry operators' high
level of capital investment in base stations and costly spectrum licenses. Furthermore, given the high rate
of technological change, continued investment in new services is necessary, which requires that assets be
continually depreciated. Depreciation as a percentage of revenue has increased over the past five years as
carriers have upgraded their networks to accommodate high-bandwidth applications. Moving forward,
depreciation expenses are expected to decrease slightly as a percentage of revenue as carriers' initial
investments in these 4G networks start to pay off, and as more consumers subscribe to high-margin
services and more devices are brought to market that are 4G-ready. Depreciation accounts for an estimated
12.9% of revenue.
Additional expenses
Interest expenses are significant for wireless carriers because initial capital expenditures on networks and
spectrum are often financed through debt. Other costs incurred by wireless operators include advertising,
universal service obligations (where applicable), insurance and legal costs. Universal service obligations
are expenses that telecommunications operators pay in some countries to subsidize the provisioning of
telecommunications services in rural areas where it would otherwise be uneconomical for carriers to
expand service. Marketing expenses in the developed world have increased over the past five years as these
mature markets have approached saturation and companies have had to focus more heavily on attracting
and retaining subscribers to maintain and grow economies of scale.
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Basis of Competition
Competition is high and increasing.
Competition in the Global Wireless Telecommunications Carriers industry is based on price, service and
product innovation. The development of a strong brand name and the geographic coverage of a mobile
network are also key areas of competition.
Internal competition
Because it is often difficult to differentiate service offerings, price is a major point of industry competition.
Indeed, most domestic markets are characterized by operators offering similar coverage and services. Price
includes airtime charges, which vary according to the time of day and distance, and handset costs (which
are often subsidized). Operators engage in fierce price competition to remain appealing to price-sensitive
consumers, especially in emerging economies.
Network coverage is another major area of competition within the industry. Networks will often claim to
cover a certain proportion of the population; however, this should not be confused with geographic
coverage, as the majority of the population lives in urban and suburban areas. Many consumers who live in
remote areas use satellite-based telecommunications services, which provide ubiquitous coverage. The
costs of expanding network coverage to rural areas are often prohibitive for carriers, particularly those that
operate in emerging and developing economies.
Product innovations are particularly important to maintain a competitive advantage in the industry. The
speed of mobile technological advances combined with the trend towards convergence has made it
necessary to offer consumers the latest value-added features and network technology. The majority of
carriers in the developed world are competing by aggressively implementing and expanding fourth
generation (4G) networks that offer the fastest data transfer speeds currently available. Being able to
quickly roll out new products is of paramount importance to maintaining a competitive advantage.
External competition
Wireless telecommunications carriers also face high levels of external competition. In many markets,
mobile carriers are competing against wired communication carriers; however, wired telecommunications
carriers pose a limited threat to the industry. In developed economies, the wired market is suffering as
consumers disconnect from wired networks at a rapid rate; in less-developed economies, wired
telecommunications carriers are much less prevalent than their wireless counterparts.
As 4G network coverage increases, wireless telecommunications carriers will face increased competition
from internet service providers and over-the-top (OTT) communications providers (i.e. services that use a
third party's network to deliver services). Examples of OTT providers include video-streaming service
Netflix and video-conferencing service Skype, both of which use third-party internet-protocol (IP)
networks to provide their services.
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Barriers to Entry
Barriers to entry are high and increasing.
Barriers to Entry checklist
Level/Impact
Industry Competition
Industry Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation and Policy
Industry Assistance
High
Low
Mature
High
High
Medium
None
SOURCE: IBISWORLD
Companies looking to enter the Global Wireless Telecommunications Carriers industry face a number of
significant barriers to entry. The most formidable of these barriers are the capital intensity of the industry
and its regulatory backdrop. Industry operators allocate significant capital toward the building and
upgrading of wireless networks. Gaining access to large amounts of capital is difficult, especially in the
current economic climate, and may preclude some companies from entering the industry.
The high rate of technological change in the industry increases its capital intensiveness. Generational
technology has a relatively short life cycle: second-generation technology is nearing the end of its life cycle
in developed economies, reflected by the commoditization of voice services, and third-generation services
are now offered by all the major carriers in developed markets. Moreover, operators are continually
upgrading their networks to offer faster data speeds and differentiate themselves. Such upgrades require
ongoing access to capital.
Another means by which wireless carriers attempt to achieve differentiation to reduce churn and drive
subscriber growth is through product bundling. This can only be offered by full-service
telecommunications providers, which may either own the necessary infrastructure to provide such services
or offer these services through resale partnerships. Pure wireless players will find it difficult to compete
against full-service providers that are able to offer bundled product offerings at a discount (compared to
subscribing to each service separately). Finally, a number of regulatory requirements need to be satisfied
before a company can compete in the market, such as the need for a spectrum license, which entitles
operators to provide mobile services within specified geographic areas over certain frequencies.
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Industry Globalization
The level of globalization is medium and increasing.
The level of globalization may vary in each region, because it measures the extent to which local carriers
derive revenue from foreign sources and the share of regional industry revenue generated by foreignowned wireless telecommunications carriers. Currently, the industry exhibits a moderate level of
globalization, as major companies typically dominate their domestic country, instead of operating on a
truly global scale. However, there is an increasing trend of cross-region mergers, which have led to an
increase in industry globalization.
23
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Major Companies
Major Player
Market
Share
China Mobile Limited
7.0% (2016)
Verizon Communications Inc.
5.3% (2016)
Other
87.7% (2016)
China Mobile Limited

Market Share: 7.0%
China Mobile (CM) was incorporated in Hong Kong in 1997 and is now the largest mobile
telecommunications carrier in the world in terms of both revenue and subscribers. The company provides
wireless services in all 31 provinces, autonomous regions and directly-administered municipalities in
Mainland China, as well as in Hong Kong. At the end of June 2015, it had a customer base of over 810
million people. China Mobile Communications Corporation, a state-owned private holding company, has a
73.7% equity stake in China Mobile. China Mobile also owns China Mobile Pakistan, a Pakistani
telecommunications firm. The company's other subsidiaries include China Mobile Communication Ltd.,
China Mobile Communication Co. Ltd. and Guangdong Mobile, among others.
In 2009, CM was awarded a license to implement a third-generation (3G) network using the TD-SCDMA
(time division-synchronous code division multiple access) standard, an alternative to W-CDMA, which the
company helped develop. The company undertook large-scale investment in the development of the TDLTE network in 2013 and intends to use it primarily to carry high-bandwidth and high-quality wireless
broadband businesses. At the end of June 2015, the number of fourth-generation (4G) customers had
reached 190.0 million, accounting for 23.0% of the total customer base. Since CM uses a homegrown
network technology, the firm has, until recently, been unable to offer the array of devices that other
carriers can offer, most notably the iPhone. In contrast, CM's domestic rivals, China Telecom and China
Unicom, employ more compatible technologies and have helped grow their market share (largely at the
expense of CM) by offering desirable handsets. However, Apple Inc. and China Mobile reached a deal in
2013, under which Apple began offering iPhones through the company. The first China Mobile iPhones
were introduced in January 2014. As the world's largest wireless telecommunications carrier, CM's success
with its TD-LTE network is expected to determine the future success of this brand of 4G technology.
Financial performance
Over the five years to 2016, company revenue is expected to grow at an annualized rate of 7.1% to $116.9
billion. CM has benefitted from its enormous scale, as the company has the largest share of wireless
subscribers in the largest market in the world. However, disappointing subscriber adoption of the firm's 3G
services has pressured company growth. This disappointment can be attributed, at least in part, to the
network's technical problems and lack of desirable handset models. Moving forward, CM is expected to
focus on expanding its 4G network after having secured a deal to offer the 4G-compatible iPhone. While
this will benefit the company over the long term, it is expected to pressure profit growth over the short
term.
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China Mobile Limited - financial performance

Year
Revenue
$ billion
Growth
% change
Operating Profit
$ billion
Growth
% change
83.1
92.0
101.7
104.4
107.9
116.9
N/C
10.7
10.5
2.7
3.4
8.3
23.8
24.2
21.9
19.1
18.9
18.2
N/C
1.7
-9.5
-12.8
-1.0
-3.7
2011
2012
2013
2014
2015*
2016*
SOURCE: ANNUAL REPORT

NOTE: *ESTIMATES
Verizon Communications Inc.

Market Share: 5.3%
US-based Verizon Wireless (VW) operates under the legal name of Cellco Partnership and was formed in
2000 through a joint venture between Verizon Communications and Vodafone PLC. Until January 9,
2009, VW comprised the merged operations of three US wireless carriers: Bell Atlantic Mobile, GTE
Wireless and AirTouch Cellular. In 2009, VW completed the purchase of Alltel, the fifth-largest cell phone
carrier in the United States, from a private equity consortium for $5.9 billion. The acquisition made VW
the largest wireless operator in the United States. Additionally, as of February 2014, Verizon acquired
Vodafone's 45.0% stake in Verizon Wireless and now has 100.0% ownership of the company.
VW offers voice and data services on a prepaid and postpaid basis, primarily using network technology
platforms 4G LTE and 3G Code Division Multiple Access (CDMA). Verizon's CDMA evolution-data
optimized (EV-DO) 3G-enabled network helps facilitate data services, such as music downloads and video
on demand at speeds of up to 1.4 megabits-per-second (Mbps). The firm's 4G long-term-evolution (LTE)
network was launched in late 2010 and covers 309.0 million people in the United States as of January
2015. Wireless service offerings are numerous and include push-to-talk, short message services (SMS) and
multimedia messaging services (MMS), mobile web and mobile TV.
In 2008, VW increased its spectrum holdings by 60.0% during a Federal Communications Commission
(FCC) spectrum auction. This move was controversial because VW was already the largest carrier in the
United States and the acquisition further cemented the company's dominance. The FCC imposed open
access restrictions on the newly acquired spectrum, which would allow mobile virtual network operators
(MVNOs) to operate using the same spectrum. Similarly, in late 2011, VW entered into an agreement to
acquire spectrum licenses from cable operators Time Warner, Comcast, Bright House Networks and Cox
Communications. Under the terms of the $3.9 billion purchase, the companies would resell each other's
services and Verizon would acquire the cable operators' unused advanced wireless services (AWS)
spectrum. In January 2014, the company acquired EdgeCast Networks Inc., a powerful content delivery
network.
Financial performance
Over the five years to 2016, company revenue grew at an annualized rate of 4.9% to reach an expected
$89.0 billion. VW's strong performance has been driven by its aggressive expansion strategy and early
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adoption of 3G and 4G LTE infrastructure. Additionally, in early 2011, Verizon customers finally gained
access to Apple's iPhone, stimulating growth in ARPU and reducing customer churn. Currently, about
75.0% of the firm's postpaid subscriber base use smartphones. This has increased handset subsidies,
particularly following the release of the iPhone 5, and pressured profit growth. An increase in retail
postpaid connections combined with the increase in penetration of 4G LTE smartphones and tablets
supported revenue growth over this period.
Verizon Wireless - financial performance

Year
2011
2012
2013
2014
2015*
2016*
Revenue
$ billion
Growth
% change
Operating Profit
$ billion
Growth
% change
70.2
75.9
81.0
87.6
84.0
89.0
10.7
8.1
6.7
8.1
-4.1
6.0
18.5
21.8
26.0
26.8
27.9
30.3
-1.1
17.8
19.3
3.1
4.1
8.6
SOURCE: ANNUAL REPORT AND IBISWORLD

NOTE: *ESTIMATES
Other Players
Although domestic wireless telecommunications markets exhibit a high level of concentration, the Global
Wireless Telecommunications Carriers industry has a low level of concentration. Nevertheless, the global
industry has seen its own share of mergers and acquisitions as well. Other notable players not mentioned
below include Telefonica SA, NTT, Deutsche Telekom AG, America Movil and Orange SA.
SoftBank Corp.
Estimated market share: 4.8%
SoftBank Corp operates in the telecommunication and internet industries. In the company's mobile
communications segment, SoftBank Mobile Corp. and other companies provide mobile communications
services and sales of mobile devices and accessories. SoftBank acquired major US mobile operator Sprint
in July 2013 and, in the Sprint segment, it provides mobile communications services in the US and sales of
mobile devices and accessories accompanying the services, as well as fixed-line telecommunication
services. Over the five years to 2016, the company is expected to grow a strong average annual 26.8% to
reach $79.8 billion, with company revenue more than doubling in 2013 thanks to its entry into the US
market.
AT&T Inc.
Estimated market share: 4.4%
US-based AT&T owns AT&T Mobility, an integrated telecommunications provider and the second-largest
wireless telecommunications carrier in the United States. Over the past four years, AT&T Mobility has
invested billions of dollars in enhancing and upgrading its GSM network infrastructure to facilitate highspeed downlink packet access (HSDPA), an advanced 3G network protocol. The firm has also been
aggressively expanding coverage of its 4G, long-term evolution (LTE) network. In January 2013, AT&T
acquired spectrum from Verizon Wireless and from Atlantic Tele-Network, allowing AT&T to deploy more
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4G LTE services. The company also invested heavily in the 2015 AWS-3 wireless spectrum auction and,
according to AT&T, the company now covers 96.0% of the US population with high-value contiguous AWS3 spectrum.
In the five years to 2016, AT&T's wireless revenue is expected to grow at an annualized rate of 3.1% to
$73.5 billion. The increase in data use, propelled by the success of the iPhone, has been a boon to AT&T in
recent years. It not only supported strong wireless revenue growth, but also delivered a considerable
improvement in the profitability of AT&T's wireless operations. In general, increasing subscribers and
subscriber data consumption has driven revenue growth.
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Operating Conditions
Capital Intensity
The level of capital intensity is high.
There is substantial investment required to attain sufficient geographic coverage to provide an
adequate service to subscribers
Spectrum licenses, particularly for 3G services, have also proven to be capital intensive
The automation of administrative functions, combined with scale economies, have led to a fall in wages
as a share of industry revenue
The Global Wireless Telecommunications Carriers industry is very capital intensive, reflecting the very
high level of capital resources tied up in wireless telecommunication networks and infrastructure. Capital
investment includes network infrastructure, land and spectrum. Mobile telecommunications carriers have
been heavily investing in expanding the capacity of their existing wireless networks or rolling out new
networks to increase capacity and improve product and service offerings. Much of this investment has been
focused upgrading 3G networks and rolling out 4G networks. Additionally, carriers have also invested
significant sums in spectrum licenses. The capital intensity of the industry has increased over the past five
years as investment in network infrastructure and spectrum has increased while carriers have reduced
labor costs to improve efficiency.
Technology & Systems

The level of technology change is high.
There is a high rate of technological change in the Wireless Telecommunications Carriers industry. The two
defining characteristics of this trait are short product life cycles and high investment in both research and
development and technological infrastructure. Ultimately, the cost of providing various services using a
range of infrastructures determines retail price points. Accordingly, a higher investment in technology,
spectrum and infrastructure will increase service prices.
Switched off: 1G
The first generation of wireless technology was Advanced Mobile Phone System (AMPS), an analog system
that was developed in the United States. This technology used different frequency carriers to create
communications channels and only had voice functionality. Analog services were switched off in early
2008.
Declining dominance: 2G
A widely used technology within the US wireless market is 2G. The defining characteristic is that it offers
limited data functionality as well as voice. Services for 2G and 2.5G are provided on two standards: Global
System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA).
GSM initially originated in Europe and is a second-generation cellular mobile radio technology that
supports voice, data and text messaging, and allows roaming among different networks. AT&T and TMobile use GSM-based technology. CDMA is a wireless communications technology that uses the principle
of spread spectrum communication. Under CDMA, communications channels are created by assigning a
special coding scheme to information flows. Verizon and Sprint Nextel use CDMA network technology.
Sprint Nextel also uses Integrated Digital Enhanced Network (iDen) developed by Motorola and
SouthernLINC Wireless; however, this network will be completely phased out by 2013.
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The stepping-stone between 2G and 3G is 2.5G. The technology increases the functionality of 2G in that it
offers enhanced data services, such as Wireless Application Protocol (WAP). WAP offers mobile internet
connectivity, albeit at slow speeds. WAP technologies can be used on a variety of handheld digital wireless
devices (e.g. cell phones, pagers, smartphones and two-way radios) and on a range of wireless networks,
including CDMA and GSM. Due to inhibited data speeds, WAP services failed to take off on 2.5G networks.
General Packet Radio Service (GPRS) allows information to be sent and received across a GSM mobile
telephone network and supplements Short Message Service (SMS) technologies. Enhanced Data rates for
GSM Evolution (EDGE) is an update of GPRS technology used on the GSM network. By using EDGE,
operators can handle three times more subscribers than GPRS; the technology triples operators' data rate
per subscriber or can add extra capacity to their voice communications. EDGE, similarly to CDMA2000,
offers slightly superior performance relative to GPRS but is not considered 3G technology. The Apple
iPhone is GSM EDGE enabled, which is why an exclusivity agreement was reached between Apple and
AT&T, which made AT&T the only carrier for iPhones until February 2011. CDMA2000 is a bridging
technology that can be classified as both 2G and 3G.
Mobile internet: 3G
Technologies for 3G have assumed market dominance in the United States. SK Telecom in South Korea
first offered 3G in October 2000. In the United States, all the major carriers offer 3G services; the appeal is
that it enables faster data transfers for users with 3G compatible devices. Such devices include cell phones,
smartphones, tablets and laptops that use a 3G card. Services for 3G have increased the demand for new
value-added services, which can offer higher profit margins and new revenue streams for carriers. Such
value-added services include internet browsing and downloading, mobile commerce, e-mail applications
and mobile TV.
Wideband Code Division Multiple Access (W-CDMA) is a spread spectrum multiplexing technique, not a
standard, which is owned by Qualcomm (owner of CDMA2000). W-CDMA was developed in 2001 by the
Japanese mobile operator NTT DoCoMo, the largest wireless telecommunications carrier in the world.
CDMA2000 1x EV-DO is a CDMA-based 3G technology that generally offers data transfer of between 300
kbps and 600 kbps. It was first commercialized in 2002. Verizon uses this technology for its 3G services.
The term 3.5G simply refers to enhanced 3G services that do not reach the agreed parameters for services
classified as 4G. It typically refers to High Speed Downlink Packet Access (HSDPA), an advanced 3G
network that offers downlink speeds of up to 14.4 Mbps and is compatible with the Universal Mobile
Telecommunication System, or UMTS. HSDPA is an advancement on W-CDMA and many major carriers
have or are in the process of upgrading their network to this standard so that more data-intensive
applications can be supported.
The future: 4G
Services for 4G support transmission speeds of up to 100 megabits per second (Mbps) for downlinks when
a user is traveling at high speeds and 1 Gbps when traveling at low speeds. Such speeds will see complete
device and network convergence (i.e. any network will be able to deliver any service over any device).
Services such as on-demand media will be available on a handheld device, mobile or laptop, using a 4G
data card.
The important development in 4G technology is that the battle between two factions appears to be over.
Ultra Mobile Broadband, the proposed 4G successor to CDMA2000, has been scrapped, with Qualcomm
announcing it was ending development of the technology and favoring LTE instead. Carriers will now all
support the GSM/UMTS faction's Third Generation Partnership Project (3GPP), known as Universal
Terrestrial Radio Access Network Long-Term Evolution (LTE). LTE will allow coexistence with a range of
previous standards, allowing handoffs between cells supporting LTE and cells supporting UMTS,
GSM/GPRS, and other systems.
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NTT DoCoMo is the major proponent of 4G technology. In the United States, Verizon outlined its plan to
introduce LTE 4G services in 2010, with a full service rollout to be achieved by the end of 2013. Meanwhile,
Sprint Nextel has already begun its 4G rollout using WiMax standardized technology. WiMax is a standard
that allows mobile broadband and has greater geographic coverage from Wi-Fi.
Wi-Fi and WiMax
Wi-Fi and WiMax are not technologies, but are standards. In order to carry these names, technologies
must have met a strict set of rules and interoperability tests for the standards governed by the Institute of
Electrical and Electronic Engineers. These standards allow wireless internet access for a broad range of
products that include laptops, PDAs and cells.
Super 3G wireless infrastructure has facilitated a significant improvement in wireless data, with flow on
effects in services, use and revenue. Indeed, data revenue is presently one of the industry's major growth
drivers. However, the price and efficiency of data streaming to customers over super 3G infrastructures are
not as cost competitive as the delivery of data services over Wi-Fi or WiMax standard technology. Building
3G cell sites (i.e. base stations) is much more expensive than establishing Wi-Fi or WiMax infrastructure,
with about 75.0% of the expense associated with land, construction and maintenance. And this will be the
same for LTE 4G.
Wi-Fi relies on proximity, which makes national blanket coverage nearly impossible. But because of its low
capital and operating costs, Wi-Fi hotspots are commonplace in locations where wireless access adds value
(e.g. airports, cafes and libraries). However, WiMax provides service to an area between three and 10
kilometers without needing a completely unobstructed path between the user and the network antenna, as
well as with superior capacity and speed when compared with the Wi-Fi standard. This is why WiMax has
been touted as a future technology for years.
But, WiMax has struggled to gain traction in the wireless space because of the dominance of GSM and
CDMA technology. However, a large number of heavy hitters in the media, communications and IT
industries are investing significant sums of money in WiMax. In the United States, Sprint Nextel is staking
its future on the technology standard through its 51.1% ownership of the WiMax company Clearwire.
Meanwhile, other investors in Clearwire include companies, such as Intel (13.2%), Comcast (8.5%), Time
Warner Cable (4.5%) and Google (4.1%). Importantly, WiMax is available to millions of businesses and
consumers now, while 4G LTE is yet to arrive.
Femtocells
In 2010, wireless carriers began showing interest in commercial offerings of femtocells. Femtocells, a small
version of a cellular base station, allow customers to increase cellular coverage wherever broadband
internet connections are available. The technology operates in a similar manner to Wi-Fi routers, enabling
two to eight cellular connections per femtocell. AT&T began offering its AT&T 3G Microcell femtocell to
customers in September 2010.
For large carriers with persistent network integrity issues, particularly AT&T (which was unprepared for
the data-intensive iPhone), femtocells improve coverage and service without significant infrastructure
outlays. However, in the future, femtocells could be deployed by some companies to undercut the services
of major wireless carriers. MagicJack, a provider of low-cost Voice over Internet Protocol (VoIP) service,
announced in January 2010 that it intends to offer a low-cost GSM femtocell, enabling users to place VoIP
calls over GSM wireless, a service the major carriers have been reluctant to allow.
Enhanced Specialized Mobile Radio Services is a digital service and applies digital systems to traditional
dispatch specialized mobile radio in the 800 and 900 MHz bands. Aggregating this spectrum and applying
a cellular-like digital network can provide cellular or PCS-like voice and data messaging services.
WWW.IBISWORLD.COM
February 2016
31
Revenue Volatility
Industry revenue volatility is low.
The Global Wireless Telecommunications Carriers industry exhibits a low level of revenue volatility.
Although the number of global mobile subscriptions has increased markedly over the past five years, this
increase has not contributed to increased revenue volatility. Wireless carriers have high fixed-cost business
models and, as such, large gains in business volume have facilitated price declines. Moreover, intensifying
competition in many regions has magnified price cutting. This has served to partially offset revenue jumps
due to large subscriber gains, ensuring that volatility was limited. Over the next five years, IBISWorld
expects revenue volatility to increase slightly as many existing subscribers upgrade to higher-margin data
services. However, as industry participants face heightened competition and markets in developed
countries reach saturation, year-on-year revenue volatility will likely be moderate.
Regulation & Policy

The level of regulation is medium and the trend is increasing.
Regulation in the Global Wireless Telecommunications Carriers industry is dependent on regulations
imposed by the government of the country in which companies operate. In most developed countries, there
is a telecommunications regulator that enforces some sort of telecommunications act, allocates spectrum
licenses and monitors the level of domestic competition to ensure that consumers receive fair prices. A
national regulator may also impose technical obligations on the operation of a network; regulate the
interconnection of a network with the networks of other carriers; regulate termination charges; require
carriers to adhere to number portability; and impose minimum service standards.
A government often appoints a regulator or association to allocate licenses to operate in a particular
country, region or state. Each regulation and association only has jurisdiction in their own country and as
such, carriers are required to apply for licenses to another regulator should they seek to operate services in
another country. Licenses are only granted to companies that are registered in that particular market. As
such, foreign companies that operate abroad will typically establish a subsidiary to hold and operate such a
license.
Spectrum licenses are necessary if a company is to operate as a wireless telecommunication provider in a
particular domestic market. The allocation of spectrum in a particular band is finite and is considered a
substantial barrier to entry, which often limits the number of national players in any given domestic
market. Different bands fit different standards, which means carriers must hold licenses for each of the
different services they offer (e.g. a different license for 2G and 3G services independently). Licenses are
only held by a carrier for a specific period, usually ten years, so carriers must periodically renew their
licenses or seek new licenses where appropriate. Mobile resellers can provide wireless services without
holding spectrum licenses; however, these companies are excluded from this industry report because they
do not operate their own switched infrastructure.
Foreign ownership restrictions on spectrum licenses are imposed by some regulators. For example, the
Federal Communications Commission (FCC) in the United States may limit non-US citizens or their
representatives from holding more than 20.0% of the capital stock of an FCC licensee. In Thailand and
Vietnam, no foreign provider can own more than 50.0% of the equity in any telecommunications company.
In India, this level is 49.0%.
International roaming reflects calls made by foreigners on a network other than their domestic provider.
Such calls are possible because wireless telecommunications carriers have wholesale roaming agreements
in place whereby access tariffs are charged for network access. In essence, such arrangements allow a
seamless transition of services. While the market determines the price of these services in most instances, a
regulator may intervene by setting prices or fining a carrier when charges are deemed excessive.
WWW.IBISWORLD.COM
February 2016
32
Industry Assistance
The level of industry assistance is none and the trend of industry assistance is steady.
There are no specific tariffs for this industry.
In most countries where market systems are in place, the industry receives no direct level of government
assistance. Nevertheless, the industry has many international and domestic association working to support
it in many countries. The International Telecommunication Union is the United Nations specialized agency
for information and communication technologies, developing the technical standards that ensure networks
and technologies seamlessly interconnect while striving to improve information and communication
technologies to underserved communities. GSMA represents the interests of mobile operators worldwide
and organizes industry events, such as the Mobile World Congress and Mobile Asia Expo. Open Mobile
Alliance delivers open specifications for creating interoperable services that work across all geographical
boundaries, on any bearer network. CTIA the Wireless Association is an international nonprofit
organization that represents the wireless communications industry, advocating on behalf of members at
government levels, coordinating efforts to provide greater service for customers and supporting industry
initiatives.
WWW.IBISWORLD.COM
33
February 2016
Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
($b)
IVA
($b)
1,119.1
1,214.5
1,275.7
1,327.5
1,354.0
1,449.7
1,517.7
1,575.7
1,636.5
1,673.5
1,727.4
1,777.1
1,820.2
1,859.2
1,908.8
495.7
560.8
581.9
592.3
553.9
620.4
667.2
664.7
690.3
706.6
732.4
756.9
778.4
798.5
820.6
EstablishEmployments
Enterprises
ment
Exports
(Thousands)(Thousands)(Thousands)
($b)
1,186
1,164
1,132
1,113
1,086
1,069
1,049
1,062
1,089
1,119
1,147
1,177
1,193
1,210
1,234
915
885
862
845
816
804
790
781
782
789
794
801
793
789
784
Imports
($b)
Wages
($b)
Mobile
Subscribers
(Million)
2,023
2,073
2,113
2,160
2,224
2,205
2,190
2,253
2,347
2,441
2,527
2,615
2,679
2,745
2,826
122.4
123.0
123.3
123.1
122.6
122.4
121.6
126.6
131.5
135.1
140.0
144.7
148.6
152.4
154.2
3,368
4,030
4,640
5,317
5,957
6,156
7,052
7,397
7,712
7,986
8,250
8,453
8,664
8,855
9,066
Employment
(%)
Exports
(%)
Imports
(%)
Wages
(%)
Mobile
Subscribers
(%)
2.5
1.9
2.2
3.0
-0.9
-0.7
2.9
4.2
4.0
3.5
3.5
2.4
2.5
3.0
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
0.5
0.2
-0.2
-0.4
-0.2
-0.7
4.1
3.9
2.7
3.6
3.4
2.7
2.6
1.2
19.7
15.1
14.6
12.0
3.3
14.6
4.9
4.3
3.5
3.3
2.5
2.5
2.2
2.4
Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
(%)
IVA
(%)
8.5
5.0
4.1
2.0
7.1
4.7
3.8
3.9
2.3
3.2
2.9
2.4
2.1
2.7
13.1
3.8
1.8
-6.5
12.0
7.5
-0.4
3.9
2.4
3.7
3.3
2.8
2.6
2.8
Establishments
Enterprises
(%)
(%)
-1.9
-2.7
-1.7
-2.4
-1.6
-1.9
1.2
2.5
2.8
2.5
2.6
1.4
1.4
2.0
-3.3
-2.6
-2.0
-3.4
-1.5
-1.7
-1.1
0.1
0.9
0.6
0.9
-1.0
-0.5
-0.6
WWW.IBISWORLD.COM
February 2016
34
Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
IVA/revenue
(%)
Imports/
demand
(%)
Exports/
revenue
(%)
Revenue per
employee
($'000)
Wages/
revenue
(%)
Employees
per est.
Average
wage
($)
44.3
46.2
45.6
44.6
40.9
42.8
44.0
42.2
42.2
42.2
42.4
42.6
42.8
42.9
43.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
N/C
553.2
585.9
603.7
614.6
608.8
657.5
693.0
699.4
697.3
685.6
683.6
679.6
679.4
677.3
675.4
10.9
10.1
9.7
9.3
9.1
8.4
8.0
8.0
8.0
8.1
8.1
8.1
8.2
8.2
8.1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
60,504.2
59,334.3
58,353.1
56,990.7
55,125.9
55,510.2
55,525.1
56,191.7
56,029.0
55,346.2
55,401.7
55,334.6
55,468.5
55,519.1
54,564.8
Figures are inflation-adjusted 2016 dollars

NOTE: UNLESS SPECIFIED, AN ASTERISK (*) ASSOCIATED WITH
A NUMBER IN A TABLE INDICATES AN IBISWORLD ESTIMATE AND
REFERENCES TO DOLLARS ARE TO US DOLLARS.
Jargon
AVERAGE REVENUE PER USER (ARPU)A key performance indicator that indicates whether revenue is
due to increased customers or phone usage. ARPU equals revenue divided by the number of subscribers.
CHURN RATE Refers to the proportion of subscribers that discontinue service during a given time period
(e.g. quarterly or annually). Customer churn measures a company's success in retaining customers.
M-COMMERCE A transaction that is initiated or completed using a mobile electronic device.
POSTPAID A contract-based cell phone service that is paid for after use. Subscribers receive a bill that is
based on their use of cell phone services for the month.
PREPAID A cell phone service that is purchased prior to use. The subscriber purchases credit to use on a
cell phone network and in doing so, avoids ongoing billing.
WWW.IBISWORLD.COM
February 2016
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CONTENTS

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IBISWorld Industry Report

Industry Definition .........................................2

Key Success Factors ................................... 18

Industry Performance .............................. 4

Major Companies .................................... 24

Executive Summary ......................................4

China Mobile Limited ................................... 24

About This Industry ................................. 2

Products & Markets ................................. 10

Competitive Landscape ........................... 18

Operating Conditions .............................. 28

Key Statistics ........................................... 33

www.ibisworld.com | www.ibisworld.com.au | www.ibisworld.co.uk | www.ibisworld.com.cn

Global Wireless Telecommunications Carriers

About This Industry

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Key External Drivers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Industry Life Cycle

Global Wireless Telecommunications Carriers

Products & Markets

Global Wireless Telecommunications Carriers

Products & Services

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Africa & Middle East

India & Central Asia

South East Asia

Africa & Middle East

India & Central Asia

South East Asia

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Key Success Factors

Global Wireless Telecommunications Carriers

Cost Structure Benchmarks

Rent & Utilities

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

Barriers to Entry checklist

Global Wireless Telecommunications Carriers

Global Wireless Telecommunications Carriers

China Mobile Limited

Verizon Communications Inc.

China Mobile Limited

Global Wireless Telecommunications Carriers

China Mobile Limited - financial performance

SOURCE: ANNUAL REPORT

Verizon Communications Inc.

Global Wireless Telecommunications Carriers

Verizon Wireless - financial performance

SOURCE: ANNUAL REPORT AND IBISWORLD