Subject: [NEXTEL-1] U.S. Wireless Market to Reach $190.8 Billion by 2007

From: [email-masked]
Date: Tue, 10 Feb 2004 17:49:01 -0500

U.S. Wireless Market to Reach $190.8 Billion by 2007
Wi-Fi Technologies and Introduction of New Applications to Drive
Growth of Wireless Communications Services Market

Total spending in the United States on wireless communications will grow in 2004
by 7.6 percent, achieving a total of $144.7 billion, according to the newly
released TIA's 2004 Telecommunications Market Review and Forecast, an annual
publication of TIA. The report predicts the wireless market will reach $190.8
billion by 2007, with a 9.1 percent compound annual growth rate from 2004 to
2007.

The U.S. wireless market consists of transport services, handsets,
infrastructure including Wireless Fidelity (Wi-Fi®) equipment and professional
services in support of the wireless infrastructure. Spending in 2003 totaled
$134.5 billion, up 7.9 percent from 2002. Continued double-digit growth in
transport services and an increase in handset and support services spending
offset an 8.4 percent decrease in wireless equipment. The 2003 performance
represents the first single-digit gain in the wireless market following years of
double-digit growth, indicating that the market is approaching maturity.

The study predicts that the U.S. wireless subscriber base (wireless telephony
and paging) will continue to expand, but at single-digit instead of double-digit
rates. By 2007, there will be an estimated 195.5 million wireless communications
subscribers, up from a predicted 168.3 million in 2004.

As subscriber growth rate diminishes, new applications, such as wireless
Internet access, text messaging, instant messaging, ring tones, wireless games,
multimedia messaging services and Wi-Fi technologies, will drive the market.
Spending on wireless communications services is expected to rise by 10.5 percent
in 2004 reaching $98.7 billion, and to expand at a 10.7 percent compound annual
rate reaching an estimated $134.0 billion in 2007.

Wireless handset spending by end users is expected to grow faster in the coming
years, fueled by accelerated replacement sales of more sophisticated handsets.
Spending on wireless communications handsets will reach an estimated $10.2
billion in 2004, an increase of 6.6 percent over 2003. The overall handset
market will increase from $10.2 billion in 2004 to $13.2 billion in 2007,
growing at an 8.3 percent compound annual rate.

"With the introduction of new applications such as Wi-Fi technologies and more
sophisticated communications products, we'll see an increase in carrier
revenues. The initial rollout of 2.5G technologies enabled carriers to offer
enhanced wireless data services. We are now seeing the start of nationwide
deployment of 3G applications with claims of average user speeds of 300-500
kbps. Prices associated with these new applications and service plans with more
minutes will boost spending on wireless communications services," stated TIA
President Matthew J. Flanigan.

Other highpoints of this year's report include:
Wi-Fi technologies represent a small but rapidly growing component of the
wireless communications services. Spending on Wi-Fi services is expected to
increase from $48 million in 2004 to $270 million in 2007.  The availability of
free Wi-Fi services and the use of the technology as a promotion for other
services or bundled with other services will limit the potential for Wi-Fi as a
stand-alone revenue generator. Nevertheless, Wi-Fi applications, growing at a
17.4 percent compound annual growth rate, are propelling the equipment market.

Overall wireless equipment spending is projected to increase from $21.7 billion
in 2004 to $26.3 billion in 2007, growing at a 4.4 percent compound annual rate.

Spending on services in support of the wireless infrastructure such as basic
services and support (field maintenance and repair, for example), professional
services and depot repair and logistics, rose by 4.7 percent in 2003, down from
the increases of more than 25 percent in prior years.  The slowdown reflected
lower capital expenditures in 2003 and the fact that the wireless network is
largely in place. With the introduction of 2.5G and 3G technologies, spending
will increase to a projected $17.3 billion by 2007, up 6.4 percent on a compound
annual basis from the anticipated $14.2 billion in 2004.

http://pulse.tiaonline.org/article.cfm?id=1936
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