Approximately 318.6 million new cellular connections will be added in Europe by 2007, of which 160 million will be Global System for Mobile communications connections, according to The Strategis Group’s report, “Western European Cellular/3G Markets 2000-2007.”
As a result of these new customers, the average cellular penetration in Western Europe will grow from 32.5 percent to 85 percent by 2007, said the report.
In Eastern Europe, cellular connections will reach an estimated 80 million, 51 percent of which will be accounted for by the Russian and Polish markets alone, said the research firm’s “Eastern European Cellular/3G Markets 2000-2007” report.
Jake Saunders, European director for The Strategis Group in London, noted several principal drivers for cellular growth in Europe. He said much of the anticipated growth can be attributed to region-wide licensing of additional networks, particularly GSM 1800.
Saunders also said the widespread adoption and staying power of prepaid pricing schemes, the introduction of cheaper dual-band handsets, and operators implementing second-generation and/or third-generation technologies to offer wireless Internet access will drive future growth throughout Europe.
As a result of lifestyle trends, it has become necessary to analyze the market in terms of “connections” rather than subscribers, he said.
“All these developments will contribute to a rising trend in multiple subscriptions per user,” said Saunders. “People will be able to work and play with greater flexibility and control than ever before.”
The studies also projected that roaming revenues will increase. A typical GSM subscriber now can roam to more than 100 countries, a trend that is being facilitated by GSM handset manufacturers.
Short message services are becoming increasingly popular in the Nordic countries, where cellular penetration is in excess of 70 percent. Saunders said countries like Sweden, Finland and Norway have high rates of Internet use as well, a trend that often goes hand-in-hand with SMS use.
Saunders said he expects to see SMS gain momentum in these countries and then spread further south in the next five years.
The prognosis for the future of cellular communications in Europe foremost takes into account the rapid consolidation of European telecommunications providers, as evidenced by the recent Vodafone plc/Mannesmann AG merger and the looming acquisition of U.K. operator Orange plc.
This consolidation, said Saunders, eventually will lead to the existence of pan-European operators.
As for 3G, the reports said GSM still has some mileage in it, and could fight for market position for a while. A key consideration for the success of 3G will obviously be price, said Saunders.
“The success of fixed-line Internet access can be attributed to its feature-rich capabilities and virtually free price tag. Wireless Internet is unlikely to deliver upon these requirements for five or so years after commercial launch,” said Saunders. As a result, wireless Internet access likely will be suited to the business user or the “well-off” residential user.
T-Mobil, the mobile services unit of Deutsche Telekom, will continue to be a dominating presence in Europe, and Germany holds the most promise for service providers in terms of new customers, Saunders said.
