Tablets to generate $20B for wireless operators in 2017, firm predicts

Cellular-capable tablets will generate a total of $20 billion for wireless operators in 2017, according to research firm Strategy Analytics, due in large part to operators' efforts to encourage subscribers to activate LTE connections on tablets through shared data plans.

"Mobile broadband tablets represent an important incremental growth opportunity for wireless operators. While direct mobile broadband subscriptions on tablets represent less than 10 percent of the total tablet installed base in 2012, they were a key driver of positive postpaid net additions at leading operators AT&T and Verizon Wireless in Q1 2013," said Susan Welsh de Grimaldo, director of Wireless Operators and Networks at Strategy Analytics.

Indeed, during the carrier's first-quarter earnings conference call, AT&T (NYSE:T) CFO John Stephen said that sales of tablets showed "strong gains," drawing almost 300,000 postpaid subscribers during the period. And in the carrier's 10-Q filing with the Securities and Exchange Commission, AT&T specifically pointed to tablets as a data revenue driver: "Data service revenues increased $890, or 21.0%, in the first quarter of 2013. The increase was primarily due to the increased number of subscribers using smartphones and data-centric devices, such as eReaders, tablets, and mobile navigation devices. Data service revenues accounted for 34.0% of our wireless service revenues for the first quarter of 2013, compared to 29.1% last year."

Strategy Analytics forecasts global mobile broadband subscriptions on tablets will grow eight times from 2012 to 2017--as more than 165 million new tablets activate mobile data services.

Interestingly, Strategy Analytics predicts tablets will generate around 3.5 million terabytes of mobile data traffic in 2017.

The findings are notable considering that most tablets today connect only to Wi-Fi networks. The situation has robbed wireless operators of additional revenues they had hoped to obtain from users connecting their tablets to cellular networks. The reason, not surprisingly, is that users generally did not wish to pay for another line of service specifically for their tablets.

Partially in response to the situation, AT&T and Verizon Wireless (NYSE:VZ) last year introduced shared data plans, which allow users to draw from one bucket of data using multiple devices, from smartphones to cameras to tablets. Since then, C Spire Wireless also launched shared data plans, and U.S. Cellular (NYSE:USM) has said it plans to do so as well.

For more:
- see this Strategy Analytics release

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