Mobile services will generate EUR97 billion in revenue across Western Europe in 2002, just 4% more than in 2001, according to a new report released today by Analysys, the global advisor on telecoms and new media. Mobile services revenue rose 12% in the previous year, but the rate of growth has slowed substantially as operators are caught in a double-bind of fewer new subscribers and falling average revenue per user (ARPU).

The report, Western European Mobile Forecasts and Analysis 2002-2007, points out that with 70% of Western Europe's population having a mobile phone, the market is nearing its saturation point of around 80% penetration - and operators need to increase the usage of non-voice services now to stimulate a recovery in ARPU.
"Operators have been trying to increase ARPU to counter the effects on revenue of slowing subscriber growth, but it will be some years before ARPU returns to the levels seen in 2000 or even 2001," commented principal analyst Katrina Bond, the report's author.

Mobile operators have suffered from falling ARPU for voice services over many years, and have been attempting to compensate by encouraging usage of non-voice services such as messaging, downloadable ringtones and mobile Internet access. They have seen some success in stimulating usage - Analysys estimates that non-voice services accounted for 8% of mobile ARPU across Western Europe in 2001 - but the overall trend in ARPU is still downward.

This means that the next few years will see very slow growth for overall mobile revenue. The long-term outlook, however, is more positive: Analysys forecasts mobile services revenue of EUR135 billion for 2007, of which it expects 37% to be from non-voice services. The growth in non-voice service revenue will be driven mainly by messaging and infotainment services, revenue from which Analysys forecasts will grow from EUR7.6 billion in 2001 to EUR44 billion in 2007.

"For consumers, the operators will build on the current popularity of text messaging and start to provide multimedia messaging from the second half of 2002," says Bond, "while for businesses mobile email will be their most important messaging service."
With delays expected in the arrival of third-generation (3G) mobile services, Analysys predicts a wide window of opportunity for GPRS as an interim technology. GPRS is also helping to smooth the path for 3G, by allowing operators to address issues associated with providing advanced mobile data services to prepaid customers and international travellers now.

The report analyses the key trends in the Western European mobile market and examines the progress made with GPRS and UMTS. It also provides detailed market forecasts for Western Europe as a whole, and individually for France, Germany, Italy, Sweden and the UK.