In 2014, mobile retail revenues in the UK fell by 1.3% year-on-year, representing the second consecutive annual decline in the market. By volume, however, the mobile market continues to grow, with total subscriptions including mobile handset, machine-to-machine (M2M) and mobile broadband connections rising by 1.7% in 2014 to just under 90 million.
A value decline in the mobile phones market is a symptom of the rising uptake of data services, says a new Key Note report entitled Mobile Phones, with the proliferation of smartphones and the ongoing roll-out of faster mobile Internet over the fourth generation (4G) of mobile networks driving instant messaging (IM) and Voice over Internet Protocol (VoIP) volumes.
These data-based services are essentially free of charge for users, as they are used most often while connected to a Wi-Fi network. As a result, mobile users are sending fewer short messaging service (SMS) text messages each year, with 2014 representing the second year of double-digit decline in SMS volumes. It is this trend that is the main driver of the decline in total operator revenues. While revenues in the sector may continue to see decline as a result of this trend, the post-pay mobile sector, covering income from monthly mobile phone contracts, has seen sustained value growth for a number of years. These contracts have proved hugely popular in recent years, having overtaken pre-pay connections or pay-as-you-go, back in 2011, because they allow consumers to spread the cost of expensive smartphone devices over the duration of the contract, as well as providing generous bundled allowances for voice, text and data services.
So, while falling SMS volumes could lead to further decline in the mobile market, growth is expected to return, off the back of increased demand for post-pay mobile contracts and continuous launches of new versions of highly desirable smartphones.
The author of this blog is Adam Pembrey, marketing manager at Key Note
