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The overall wireless telecom market is $130 billion annually according to Telecommunications Industry Association (TIA). It can be divided into two basic segments; postpaid and prepaid. Postpaid customers receive bills each month for the usage under their account and pay accordingly they are extended credit by their service provider. Prepaid customers pay for all equipment and service in advance of use they are not extended credit by the service provider.
The Yankee Group forecasts that the number of global wireless users will increase 49 percent between 2003 and 2007 to total about 1.7 billion. Analysts further predict subscriber revenues will reach $584 billion in 2007, compared with $387 billion in 2002, making wireless services similar in value to worldwide crude oil production.
The wireless industry is seeing consolidation by the regional carriers. However, ample competition remains. According to the FCC, 97 percent of the U.S. population lives in counties served by at least three mobile operators, an increase from 88 percent in 2000. Carriers are constantly developing new pricing strategies and have introduced plans offering large numbers of minutes for a fixed price and discounts during non-peak hours as a way to stay a step ahead of the competition. Average monthly spending is expected to continue to increase with the introduction of new services and more expensive plans that include more minutes. Average spending per subscriber will increase to $55.25 per month by 2009, growing at a compound annual growth rate (CAGR) of 2.4 percent. By contrast, average spending decreased each year in the 1990s. Growth in the number of new subscribers will slow in the next few years, because nearly two-thirds of the population already has a wireless phone. The number of subscribers is projected to reach 270 million by 2009, up from 194.5 million in 2005, increasing at a CAGR of 8.5 percent.
One of the factors propelling wireless growth has been the emergence of prepaid wireless plans. Between 2002 and 2005, the number of prepaid wireless subscribers more than doubled to 28.9 million, comprising nearly 15 percent of all wireless subscribers. TIA predicts there will be 34.7 million prepaid wireless subscribers in 2006 and 41.3 million subscribers in 2009, growing at a 9.3 percent CAGR. Revenue in this area is projected to be 22.3 percent on a CAGR, increasing to $22.2 billion in 2009 from $13.8 billion in 2006.
Various analysts agree that prepaid mobile is on an aggressive growth trend in the United States. Atlantic-ACM calls prepaid wireless the fastest growing segment of the entire U.S. wireless industry. The Yankee Group predicts subscriber growth from 9.4 million in 2000 to more than 50 million in 2006. iGillott Research forecasts that prepaid users will grow from 14 percent of the overall U.S. wireless subscriber base today to nearly 30 percent in 2006. While U.S. prepaid mobile revenues were about $4 billion in 2002, the Pelorus Group research firm forecasts U.S. prepaid mobile revenues to hit $20 billion in 2006. According to the Yankee Group, In the next few years the United States will begin to resemble Europe in terms of widespread acceptance of wireless prepaid services.
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