US wireless competition is booming

22 Jun 2001 at 14:35 GMT

Mobile penetration in the US increased by almost a third last year as carriers reduced their prices, according to the latest competition report from the Federal Communications Commission. As expected the number of subscribers using mobile data services is still relatively low.

According to the regulator's annual competition report the number of mobile subscribers had increased to 109.5 million by the end of last year from 86 million in 1999. This translates to 39 percent penetration of the country's population.

However, only 2 percent (2.5 million) of US subscribers used mobile data services by the end of last year. The only decline in market is the usage of one way paging devices, which are being booted out by two-way messaging.

The price of mobile services also decreased by about 12.3 percent during the year. However, compared to landline prices the cost of mobile calls is still relatively high with an average USD 0.21 per minute charge. The market brought in revenue of USD 52.5bn last year compared to USD 40bn in 1999.

The regulator also concluded that competition in the market has increased and that about 91 percent of the population can choose from at least three different operators while 75 percent of the US population live in areas with five or more operators competing to offer services. About 47 percent of the population can choose from at least six different mobile operators.

However, Tom Sugrue, the FCC's wireless bureau chief also pointed out that the FCC receives an increasing number of quality of service complaints from customers. He noted that this is something that operators need to address.

While North America has the highest number of subscribers in the world, it has one of the lowest penetration rates. European subscription rates range from 50 percent in France to 76 percent in Sweden. About 46 percent of the Japanese population owned a mobile phone by the end of last year.

China, which had achieved a 7 percent penetration rate by the end of 2000, had the second highest number of subscribers at 86.5 million. China's market is expected to surpass the US by the end of this year or the beginning of next year.

The FCC also found that only 11 percent of its mobile subscribers were prepaid customers. This is partly due to the fact that US operators are reluctant to engage prepaid users, who generally represent lower profits than standard subscribers.

In comparison, Italy has the highest number of prepaid users with 85 percent of its mobile consumers using prepaid services. The UK comes next with a 68 percent prepaid user base. France, Germany and Sweden all have almost 50 percent prepaid user bases.