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U.S. Wireless Market Revenue Rises 10.7% in 2005

Revenue in the U.S. wireless market totaled $174.7 billion in 2005, up 10.7 percent 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 percent 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. 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 percent 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. TIA expects a drop to single-digit increases in wireless subscribers (wireless telephony and paging) beginning in 2007, with growth averaging 8.2 percent on a compound annual basis through 2009, when there will be an estimated 278.5 million wireless subscribers, representing 88 percent of the population.

Revenue generated from all wireless services rose 14.8 percent in 2005 to $118.6 billion. TIA expects revenue to increase to $180.4 billion in 2009, growing 11.1 percent 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 percent in 2005 reaching $15 billion as a 25.4 percent increase in wireless phones offset a 21.6 decline in pagers and a 5.9 percent 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 percent 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 percent CAGR.

Overall wireless equipment revenue totaled $29.4 billion in 2005 and is expected to grow at an 8.3 percent 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 percent CAGR reaching $32 billion in 2009. Spending on services in support of the wireless infrastructure rose 18.0 percent in 2005, accelerating from the 13.6 percent 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 percent CAGR from the $11.8 billion total of 2005.

TIA’s 2006 Telecommunications Market Review and Forecast provides an overview of telecom’s interrelated market segments including landline network, enterprise and consumer, wireless communications, and international markets. It’s available in hard copy or on CD-ROM. To order, please visit http://www.tiaonline.org/business/research/mrf/ or call +1 (703) 907-7074. To obtain a press copy of the report, please contact Jennifer Mead at +1 (703) 907-7723 or email jmead@tiaonline.org.

TIA is the leading trade association for the information and communications technology (ICT) industry. As owner and producer of GLOBALCOMM™, TIA represents global ICT suppliers and their service provider and enterprise customers through its leadership in standards development, domestic and international policy advocacy, and facilitating member business opportunities. TIA represents the communications sector of the Electronic Industries Alliance (EIA). Visit us at http://www.tiaonline.org.

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