| KN32033 |
| KEY NOTE MOBILE PHONES : JUNE 2003 |
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This report covers: mobile telecommunications, analogue, digital, mobile phones, cellular telephony, connection fees, line-rentals, call rates, SMS, short message services, call minutes, subscribers, UK calls, outgoing international, whilst roaming abroad, consumer penetration, wireless application protocol, WAP, Location-based messaging services, LBS,
Companies covered include: Ericsson, Nokia, OS (UK), Orange Personal Communications Services, Vodafone Group, T-mobile (UK), Virgin Mobile Telecoms,
| 1. Market Definition 7 |
| REPORT COVERAGE 7 |
| MARKET SECTORS 7 |
| MARKET TRENDS 8 |
| Mobile Data Growth 8 |
| Market Segmentation 8 |
| Competition and Convergence With Other Communication Channels 8 |
| Fixed-Link Networks 8 |
| Convergence With Other Technologies 9 |
| ECONOMIC TRENDS 10 |
| Population 10 |
| Table 1: UK Resident Population by Sex (000 and percent), Mid-Years 1998-2002 10 |
| Gross Domestic Product 10 |
| Table 2: Index of Growth in UK Gross Domestic Product at Current Prices (index 1995=100), 1997-2001 10 |
| Inflation 11 |
| Table 3: UK Rate of Inflation ( percent), 1998-2002 11 |
| Unemployment 11 |
| Table 4: Unemployment Rate and Actual Number of Unemployed Persons ( percent and 000), 1998-2002 11 |
| Household Disposable Income 12 |
| Table 5: Index of Household Disposable Income (index 1971=100), 1997-2000 12 |
| MARKET POSITION 12 |
| 2. Market Size 13 |
| THE TOTAL MARKET 13 |
| By Value 13 |
| Table 6: The UK Cellular Telecommunications Market by Value (£bn), 1997/1998-2001/2002 13 |
| By Volume 13 |
| Table 7: The UK Cellular Telecommunications Market by Volume (million call minutes), 1997/1998-2001/2002 14 |
| MARKET SECTORS 14 |
| Table 8: The UK Cellular Telecommunications Market by Revenue Source by Value (£m), 1997/1998-2001/2002 14 |
| Rentals and Calls 15 |
| Table 9: Average Retail Revenues per Subscriber to Cellular Services by Value (£), First Quarter 2001/2002 to First Quarter 2002/2003 15 |
| Table 10: UK Cellular Calls by Network Operator by Volume (million call minutes), First Quarter 2001/2002 to First Quarter 2002/2003 16 |
| SMS 17 |
| Table 11: Number of SMS Messages Sent by Network Operator by Volume (million), First Quarter 2001/2002 to First Quarter 2002/2003 17 |
| Connection Fees 18 |
| Table 12: Number of Subscribers to Cellular Services (000), 1997/1998-2001/2002 18 |
| 3. Industry Background 19 |
| RECENT HISTORY 19 |
| NUMBER OF COMPANIES 20 |
| Table 13: Number of VAT-Based Telecommunications Enterprises by Turnover Sizeband (number and percent), 2002 20 |
| EMPLOYMENT 20 |
| Gender Profile 21 |
| REGIONAL VARIATIONS IN THE MARKETPLACE 21 |
| Table 14: Number of VAT-Based Post and Telecommunications Enterprises by Government Office Region and Country and Turnover Sizeband (£000), 2002 21 |
| DISTRIBUTION 22 |
| HOW ROBUST IS THE MARKET? 23 |
| LEGISLATION 23 |
| The Regulatory Framework 23 |
| UK Legislation 24 |
| Communications Bill 24 |
| Mobile Telephones (Reprogramming) Act 24 |
| EU Legislation 25 |
| New Regulatory Framework 25 |
| Waste From Electrical and Electronic Equipment Directive 25 |
| KEY TRADE ASSOCIATIONS 26 |
| UK Organisations 26 |
| Communications Management Association 26 |
| Federation of Communications Services Ltd 26 |
| Intellect 26 |
| Office of Telecommunications 27 |
| Radiocommunications Agency 27 |
| Telecommunications Industry Association 27 |
| Telecommunications Users' Association 27 |
| International Organisations 28 |
| Institution of Electrical Engineers 28 |
| The Institute of Electronics and Electrical Incorporated Engineers 28 |
| European Commission Advisory Groups 28 |
| 4. Competitor Analysis 30 |
| THE MARKETPLACE 30 |
| MARKET LEADERS 31 |
| Table 15: Market Share of Retail Revenue by Operator ( percent), 2001/2002 31 |
| Table 16: Subscriber Numbers by Operator (000), 2001/2002 32 |
| BT Group PLC 32 |
| Company Structure 32 |
| Current and Future Developments 32 |
| Financial Results 33 |
| Ericsson Ltd 33 |
| Company Structure 33 |
| Current and Future Developments 33 |
| Financial Results 34 |
| Hutchison 3G UK Holdings Ltd 34 |
| Company Structure 34 |
| Current and Future Developments 35 |
| Financial Results 35 |
| Nokia UK Ltd 36 |
| Company Structure 36 |
| Current and Future Developments 36 |
| Financial Results 36 |
| O2 (UK) Ltd 37 |
| Company Structure 37 |
| Current and Future Developments 37 |
| Financial Results 38 |
| Orange Personal Communications Services Ltd 38 |
| Company Structure 38 |
| Current and Future Developments 38 |
| Financial Results 39 |
| T-mobile (UK) Ltd 39 |
| Company Structure 39 |
| Current and Future Developments 39 |
| Financial Results 40 |
| Virgin Mobile Telecoms Ltd 40 |
| Company Structure 40 |
| Current and Future Developments 40 |
| Financial Results 41 |
| Vodafone Group PLC 41 |
| Company Structure 41 |
| Current and Future Developments 41 |
| Financial Results 42 |
| OUTSIDE SUPPLIERS 42 |
| Telecommunications Equipment Manufacturers 42 |
| The Battery Industry 43 |
| The Electronic Component Industry 44 |
| ADVERTISING 45 |
| Main Media Advertising 45 |
| Table 17: Main Media Advertising Expenditure by Cellular Operators (£000), Years Ending September 2001 and 2002 45 |
| Advertising on Mobile Phones 49 |
| 5. Strengths, Weaknesses, Opportunities and Threats 51 |
| STRENGTHS 51 |
| WEAKNESSES 51 |
| OPPORTUNITIES 52 |
| THREATS 53 |
| 6. Buying Behaviour 54 |
| CONSUMER PENETRATION 54 |
| Table 18: Penetration of Mobile Phones by Sex, Age, Social Grade and Region ( percent of adults), 2002 54 |
| Table 19: Penetration of Mobile Phones by Household Income and Number of Children in Household ( percent of households), 2002 55 |
| Table 20: Patterns of Monthly Bills ( percent of adults), 2001 and 2002 56 |
| CONSUMER MOBILITY 56 |
| 7. Current Issues 58 |
| PRODUCT DEVELOPMENT 58 |
| 3G Mobile Networks 58 |
| MMS 58 |
| LOCATION-BASED MESSAGING SERVICES 60 |
| WIRELESS LOCAL AREA NETWORKS 61 |
| HEALTH ISSUES 63 |
| THE ENVIRONMENT 64 |
| THE POLITICAL SCENE 65 |
| Competition Commission Inquiry into the Cost of Calls 65 |
| SIM Locking 65 |
| 8. The Global Market 67 |
| THE TOTAL MARKET 67 |
| WESTERN EUROPE APPROACHES SATURATION 67 |
| US COULD BENEFIT FROM EUROPEAN 3G DELAYS 68 |
| ASIA TO BECOME WORLD'S LARGEST MARKET 68 |
| Japan 69 |
| China 69 |
| Korea 69 |
| MOBILE PHONE OWNERSHIP IN AFRICA TO DOUBLE 70 |
| GROWTH SLOWED IN LATIN AMERICA 70 |
| 9. Forecasts 71 |
| INTRODUCTION 71 |
| The Economy 71 |
| FORECASTS 2003 TO 2007 72 |
| Table 21: The Forecast UK Cellular Telecommunications Market by Value (£bn), 2002/2003-2006/2007 72 |
| Table 22: The Forecast UK Cellular Telecommunications Market by Volume (million call minutes), 2002/2003-2006/2007 73 |
| FUTURE TRENDS 73 |
| Transition from Voice to Content Services 73 |
| Increased Competition and Convergence 74 |
| 10. Company Profiles 75 |
| Ericsson Ltd 76 |
| Nokia Uk Ltd 78 |
| O2 (uk) Ltd 80 |
| Orange Personal Communications Services Ltd 82 |
| Vodafone Group PLC 84 |
| 11. Further Sources 86 |
| Associations 86 |
| General Sources 87 |
| Bonnier Information Sources 87 |
| Government Sources 88 |
| The mobile telephone market has changed dramatically over the past 5 years. Its total value increased by 153.3 percent between 1997/1998 and 2001/2002, to reach £8.18bn. Call minutes increased by 383.6 percent during the same period, while the number of subscribers to cellular services rose by 412.9 percent. However, there is a marked slowdown in growth as the market approaches saturation point. In 2001/2002, the market grew by 19.2 percent in value, compared with its peak growth rate of 35 percent in 1999/2000. |
| The mobile telecommunications market has undergone a stream of rapid changes in recent years, including the progressive deregulation of the industry, the challenges of the digital revolution, the increases in new technologies and communications channels, and the race to rollout third generation (3G) technology. The past 2 years have seen a noticeable slowdown in the telecommunications industry worldwide. At the end of the 1990s, companies gambled on predicted surges in demand and committed vast investments to building new networks, buying stakes in foreign operators and bidding for 3G licences. Demand fell very short of expectations, however, and the industry now faces enormous debt problems. Many firms have gone bankrupt and, in 2002, the large former state monopolies in Europe were having to implement debt-reduction strategies. Furthermore, operators in the UK must now deal with price caps on termination charges imposed by the Competition Commission. The Office of Telecommunications (Oftel) estimates that this could cut revenues by up to £2bn. |
| Key trends for the telecommunications industry in the short term look likely to include increasingly fierce competition with fixed-line and other media/communication channels. Competition is likely to continue to increase due to the continued globalisation of the industry and a progressive convergence with other new technologies. This offers mobile telecommunications operators the potential for new markets and new consumer demand, but also the danger of competitor technologies decreasing business. |
| A transition from voice to content services is also likely to occur. As third and fourth generation mobile technology is launched the functions of mobile phones will expand, making voice calls an increasingly small part of what people use their phones for. Operators suffering from falling revenues for voice services will work hard to encourage the usage of non-voice services, such as messaging, games, logos, ringtones and mobile Internet access. |
Text © 2003 Key Note
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Last updated by Amanda Porteous July 2003
