I saw this excellent summary data of the US cellular industry published by CTIA (Cellular Telecommuncations Industry Association). Wireless revenues have grown from $100Bn to $150Bn since 2005, around 15% of the global figure. There are some interesting deductions to be made from it.

The US Cellular Industry Figures

I’ve copied the data below which originated from the CTIA website, http://www.ctia.org/

K=Thousand             M=Million                B=Billion                 T=Trillion

¹Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, July-December
2008, National Center for Health Statistics, May 2009.

²BLS Series data, 2008.

³CTIA Wireless 9-1-1 and Distress Calls.

Some Deductions

Business is healthy. The money coming in is growing at a much faster pace than money going out.

The ratio of cellsites to subscribers is about the same. My rule of thumb is 1000 subscribers per cellsite. You’ll find this lower in many developed European countries (which means better coverage/capacity/service). As networks continue to rollout basic coverage, cellsites are expensive (they are big towers, high power devices). Once they become mature, many more cellsites are smaller (microcells, picocells) which are much lower cost per unit.

Actually, I don’t expect the number of outdoor cellsites to increase dramatically in the next few years. ATT seem to be busy increasing the capacity of their existing cellsites, upgrading many to 7.2Mbit/s and announced plans to install a relatively small number of new sites to meet their data capacity shortages (some 2000 extra) next year. Verizon are busy installing new LTE/4G equipment, forecast to upgrade some 30% of their sites over the next couple of years. Without detailed knowledge of their plans, I’d say this type of investment will mean fewer brand new sites.

Between 2005 and 2009, wireless revenues grew almost 50% from about $100Bn to $150Bn, while annual incremental capex spend stayed the same at around $20Bn. This appears to me that operators have been through their heavy investment phase and are now reaping the rewards of their earlier investments. Global wireless revenues are now said to have breached $1Trillion, giving the US about 15% share.

Another highlight is the growth to over 20% of all households which are wireless only. Many have terminated their traditional voice landline service – they may still have some VoIP service delivered over Cable internet (such as Vonage). In the US, terminating the wireline voice service is often quite separate from high speed broadband internet.

There’s still some way to go

You might think that 90% population penetration by wireless is high. This counts the number of individual subscriptions, not the number of individual people. So if you have a Blackberry and a separate personal cellphone and maybe a separate USB data dongle, then you count as three subscriptions. Many countries (at least 30) have well over 100% penetration and you could easily expect the US to reach 120% in the near future. Indeed, Verizon CEO Ivan Isenberg predicted anything up to 50Billion connected devices in the next decade which would need more than 1000% penetration.

All of this will need high capacity, low power, always on connectivity. This needs a combination of femtocells, macrocells, microcells and WiFi to meet this demand.