More rapid migration to 3G services is a now global phenomenon, with many of positive underlying trends, such as 3G-based packages forming a greater percentage of the overall mix, 3G handsets continuing to improve and certain services such as full track music downloads and mobile TV piquing interest.
In Western Europe net additions to W-CDMA accounted for a staggering 95% of total regional net additions in the first quarter, after four quarters of running neck-in-neck with GSM additions. Make no mistake, this is exciting news for operators and indicates that migration to 3G in 2006 is going to be far higher than originally expected.
Asia is of course more heterogenous and fragmented - 3G leaders such as Japan and Korea rub shoulders with markets where licenses have yet to be awarded. Mature markets have shown declining 2G subscribers for some time now. KDDI's au brand now has less than 800,000 customers on cdma2000 networks (compared to 22.8 million on CDMA 1x and EV-DO), while NTT DoCoMo is upgrading about a million 2G subscribers to 3G each month and has 26.2 million W-CDMA customers.
So much for the advanced markets. But what of the swathe of markets from New Zealand and Australia up through Singapore, Malaysia, Hong Kong and Taiwan‾
Here too we believe the signs are encouraging. In Australia W-CDMA subscribers passed the 1.6 million mark at end-June, (8% of connections), and 3G is an increasing part of the portfolio mix of all operators. Looking ahead, we expect Telstra's migration to UMTS850 to boost the 3G base still further.
Outside Japan and Korea, Hong Kong currently has Asia Pacific's highest proportion of 3G subscribers at 14% of total subscribers. In fact 2G subscribers have declined every quarter since Q1 2005. We expect close to 20% of subscribers will be using 3G by the end of the year.
Despite the lack of a new W-CDMA entrant, in Singapore the existing operators are battling it out for subscribers: 10% of the user base had migrated to 3G at the end of May. We are seeing considerable user interest and expect connections to be close to 20% of the user base by December.
In Taiwan (a market with some of the lowest data usage worldwide) around 8% of the subscriber base has moved to 3G, however, not all have 3G handsets. New entrants Vibo and Aurora (an MVNO) along with the GSM operators are stepping up the competitive pace.
Unlocking potential value
Many of those that have upgraded have done so as part of the natural upgrade cycle and are unaware of their phones new 3G abilities. However, many 3G subscribers will be of potential higher value - upgrading as a result of being attracted to a particular iconic handset or piqued by interest in a particular service.
The larger 3G subscriber base now gives operators an increased audience at which to target new services and grow revenues. Almost all are extensively marketing a range of services, and several are seeing traction.
Yet for the majority of mobile phone owners, (non-messaging) mobile data usage is not habitual. And it can still be expensive even in the presence of flat-rate packages.