The uptake of mobile data and the 3G iPhone

The 2.5G iPhone was said to have boosted the data traffic of European operators by significant proportions--with some early adopters using the applications to such an extent that individual data usage was up as much as 40 times!

Will the 3G version have a similar impact given that it should be capable of delivering a user experience closer to what is seen on laptops?

Too early to say, perhaps--but regardless of the wonders of this particular handset, operators are already seeing their data traffic statistics accelerate with estimates of European and U.S. numbers doubling over the past 12 months. Could this growth be a factor behind the outrageous (and sometimes plainly stupid) hype that has surrounded the 3G iPhone launch as operators push data services into the consumer limelight?

One thing's for sure, the 3G iPhone will not overload the networks (unlike the iPhone ordering systems at O2) given their huge, and unused, capacity. Vodafone's management recently commented that the utilisation rate on the company's 3G networks across Europe was about 20 per cent on average (50-60 per cent in busy areas). The company also acknowledged that almost 50 per cent of the data traffic came from only 10 per cent of sites, therefore implying the need for a very strong business case for every new base station commissioned.

Could this unused network capacity lead operators to look to migrate its subscriber base to more data-intensive handsets? It would make sense, given that data traffic today only accounts for 8.4 per cent (excluding SMS) and 21 per cent (including SMS) of ARPU currently in Western Europe and North America, respectively.

What will also enthuse the operators that offer the 3G iPhone is Apple's move away from its hard-headed revenue-sharing business model. The earlier model was believed to contain a clause that saw Apple entitled to a portion of the ARPU earned by the operator related to each iPhone. While neither Apple nor the operators have confirmed the details of the arrangement, insiders believe the revenue share percentage could have been anywhere between 10 per cent and 30 per cent of the received ARPU.

So the operators' keenness to launch the iPhone, and/or its many imitators, is perhaps less to do with the device, but more to drive subscribers into using data applications that take advantage of the existing 3G networks that have yet to generate an ROI. -Paul

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