Top US wireless executives estimate that mobile data services, such as video downloads and Web surfing, could rise to as much as a third of revenue in three years, providing new income as the price of phone calls falls.
Data services could increase to 25 percent to 30 percent of revenue for US cellular network providers by 2009, from about 7 percent now, Stan Sigman, chief executive of Cingular Wireless, said on Friday at the annual CTIA wireless technology show, where he was one of several industry executives on a panel discussion.
The buzz at CTIA was all about flashy services like mobile video and music, and making purchases using mobile devices.
"We remain very bullish on the wireless industry," said Sigman at the panel discussion. Cingular, the top US cellular provider, is a venture of AT&T Inc and BellSouth Corp.
Len Lauer, the chief operating officer of No 3 player Sprint Nextel Corp, predicted strong growth for the same period, but at a slower rate. Lauer said he sees industry revenue from data in the mid-to-high teen percentage range by 2009.
"That's a lot of growth for us to get there," he said.
Ovum analyst Roger Entner cited Lauer's estimate as more realistic. Entner noted that growth is badly needed to offset the sliding price of mobile phone calls, with call prices down an estimated 72 percent since 2001.
Facing these trends, carriers around the world have been spending billions of dollars boosting their networks for advanced services that they hope will convince consumers to spend money on more than just talking.
With almost 70 percent of the US population already cellphone owners, operators are finding fewer first-time customers to sign up. But stealing clients from rivals may not be the only option for growth, according to Sprint's Lauer.
Citing the UK, which has roughly 14 percent more mobile devices than there are people, Lauer hopes for similar trends in the United States when consumers ask to connect devices that rarely have wireless links today.
"I think you need to widen the aperture and get out of this model for one handset per person," he said, as he described wireless links for sending pictures from camcorders or location information from cars.
Sanjiv Ahuja, the CEO of European mobile provider Orange, owned by France Telecom, is already looking closely at such options and cited one example of an insurance company that uses Orange's wireless network to track drivers' speed and other habits in order to calculate premiums.
"Machine-to-machine for us is a huge opportunity," Ahuja said.
Orange's experience with entertainment services may be a good omen for US operators, which only recently launched music download services.
After setting up its music store in 2004, Orange now sells more music than "many of the brick and mortar stores," Ahuja said.
Operators are also leaning on less glamorous options for growth. Cingular's Sigman said basic text messaging, a well established service that is hugely popular in Europe, has a lot of growth ahead of it in the United States.
"I don't think it's a mature product and far from it. ... We still have a small percentage of the total base actually using that," said Sigman, who described text growth as "phenomenal."