TIA: Revenue in U.S. wireless market totaled $174.7 billion in 2005

Feb. 23, 2006 - Ramp-up in new wireless subscribers was one of the key drivers of growth.
Feb. 23, 2006
3 min read

Revenue in the U.S. wireless market totaled $174.7 billion in 2005, up 10.7% from 2004, with an acceleration in handset revenue and a ramp-up in new wireless subscribers as key drivers of growth, according to the newly released TIA's 2006 Telecommunications Market Review and Forecast.

The wireless handset and device market totaled $15 billion in 2005 and is expected to increase 19.3% in 2006 climbing to $17.8 billion. Twenty-five million new wireless subscribers were added in 2005, more than in any other year, and the 21.4 million subscribers added in 2004 matched the previous high in 2001. The TIA projects the overall wireless market, including transport services, devices, wireless equipment and services in support of the wireless infrastructure, to grow at an 11.0% compound annual growth rate (CAGR), reaching $265.2 billion in 2009.

While demand for wireless communications remains strong, there are limits to its subscriber growth potential, as nearly two-thirds of the U.S. population has already subscribed to a wireless service. As a result, carriers are encouraging the development of new wireless applications that will boost average revenue per user. Growth in wireless revenue will be driven by additional minutes of use for voice services, subscriptions to wireless data packages, additional revenue-generating applications and subscribers' willingness to trade up to more comprehensive, and more expensive, plans resulting in increased revenue per subscriber. The TIA expects a drop to single-digit increases in wireless subscribers (wireless telephony and paging) beginning in 2007, with growth averaging 8.2% on a compound annual basis through 2009, when there will be an estimated 278.5 million wireless subscribers, representing 88% of the population.

Revenue generated from all wireless services rose 14.8% in 2005 to $118.6 billion. The TIA expects revenue to increase to $180.4 billion in 2009, growing 11.1% on a compound annual basis.

The recent pick-up in wireless subscribership reflects, in part, moderating price increases and the introduction of new uses for wireless communications devices (wireless phones, pagers, PC cards and personal digital assistants (PDAs). Revenue in the wireless device market rose 22.6% in 2005 reaching $15 billion as a 25.4% increase in wireless phones offset a 21.6% decline in pagers and a 5.9% decrease in PDAs. The emergence of new mobile applications such as video and music will continue to fuel both the subscriber and handset markets. Wireless phones comprise 94% of the total wireless device market, with revenue reaching $14 billion in 2005. The overall wireless device market is expected to increase from $17.8 billion in 2006 to $24.5 billion in 2009 growing at a 13.1% CAGR.

Overall wireless equipment revenue totaled $29.4 billion in 2005 and is expected to grow at an 8.3% CAGR reaching $40.4 billion in 2009. With the continued expansion of third-generation network coverage and the near-term licensing of advanced wireless services spectrum, a substantial roll-out of third-generation infrastructure will contribute to capital spending during the next few years. Capital expenditures revenue will grow at a 7.5% CAGR reaching $32 billion in 2009. Spending on services in support of the wireless infrastructure rose 18.0% in 2005, accelerating from the 13.6% increase in 2004. New wireless applications and wireless infrastructure upgrades are fueling growth in this area. Total spending on services in support of wireless infrastructure in the United States will increase to a projected $20 billion by 2009, up 14.1% CAGR from the $11.8 billion total of 2005.

The TIA is based in Arlington, VA. For more information visit www.tiaonline.org.

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