US Wireless Market 3Q 2006 Update

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Market – 3Q06 Update US wireless data market continues to grow rapidly. As expected, for the first time, the top three US carriers (Verizon, Cingular, and Sprint Nextel) crossed $1B/quarter in data revenues. US is the only country with 3 carriers in the $1B/quarter data revenues group (There are 7 total, only NTT DoCoMo is in the exclusive over $2B/quarter club). This takes the overall US wireless data service revenue tally to over $10.5B for the year (compared to $8.6B for entire 2005) and is expected to cross $15B in Verizon continues to dominate and has shown better performance than its rivals. It became the number one carrier in terms of service revenues and data revenues, and is heading steadfastly to claim the coveted carrier with most subs title by second half of Its data revenues for the year were approx. $3.1B followed by Cingular at $2.9B, Sprint Nextel at $2.8B, and T-Mobile US at $1.2B. Sprint retains its leadership position of highest wireless data ARPU in terms of absolute dollar amount at $7.75 but Verizon continues to lead in terms of % data ARPU at over 14%. Average data ARPU for the industry is now $6.8 or 13%. Overall ARPU (voice + data) increased slightly for the second straight quarter to $53.09 bucking the general trend of slow ARPU decline. Both Verizon and Cingular reported slight increase in voice ARPU. Average Overall ARPU was $ Sprint led with $61 followed by T-Mobile at $51, Verizon at $50, and Cingular with $49.8. US 3G subscriber base continues to grow - primarily due to Verizon and Sprint Nextels aggressive push. With Cingular and T-Mobile joining the fray, the 3G growth is expected to accelerate with 2007 being the inflection year. In terms of EV-DO vs. WCDMA, EV-DO is quite ahead in both coverage and handset diversity. As of Sept 2006, there were 15 3G handsets available in the market (representing approximately 20% of the available handsets from big four), 14 EV-DO (10 from Verizon, 4 from Sprint Nextel) vs. 1 UMTS/HSDPA handset from Cingular.

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Market – 3Q06 Update US added over 16M net subscribers from Jan-Sept This translates into 1.7M subs/month which is slightly lower than the 2005 average of over 2M/month. Given the fact that we have crossed 75% penetration, the declining rate is indicative of approaching saturation in the market. The top 4 US carrier account for 81% of the subscribers, 86% of the service revenues, and approximately 95% of the wireless data revenues. US Off-net revenues for the year are likely to exceed $750M. Data ARPU of CDMA/EV-DO carriers was 20% higher than GSM/WCDMA carriers. Several high-profile MVNOs were launched over the course last year and the overall results have been disappointing primarily due to poor execution, instant crowding effect, and competition from big 4. Mobile ESPN was first to bow out last quarter. US wireless carriers are steadily climbing in their wireless data performance as compared to their peers worldwide. Verizon, Cingular, and Sprint ranked # 4, 5, and 7 respectively, amongst the top 10 operators worldwide in terms of total wireless data revenue generated for the first nine months of T-Mobile US outperformed its parent TMO Germany for the first time by generating $434M in data revenues (compared to $425M by TMO Germany). In terms of total wireless data revenue for the first nine months of 2006, the #1 carrier worldwide is NTT DoCoMo which has maintained its position for a number of years. It has generated over $7.8B in wireless data revenues during the first nine months and will eclipse $10B mark for In terms of wireless investments, over $5.1B was invested in wireless related companies/startups from Jan-Sept Source: Rutberg. Mobile TV/Video, Mobile Personalization, Mobile Search and Advertising, Semiconductor, Carrier infrastructure, Device design and development are hot areas. M&A activity also picked up quite significantly. Worldwide Handset market share Q306: Nokia and Motorola dominated with 35.4% and 21.5% market share respectively. Samsung with 12.3% stands third. Source: Credit Suisse. Sprint's cozing up with the cable guys has started the realignment for "quad-play" and "quintuple play" positioning in the market. Clearly, bundling enhances life value of the customer and lowers churn but do you do it through partnership or investment is the question on the table.

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Service Data Revenues

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Carriers: ARPU Trend

© Chetan Sharma Consulting, All Rights Reserved Nov Voice and Data ARPU of top 4 carriers

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Carriers: Data ARPU Trends

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Carriers: Data ARPU Trends

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Carriers: Market share

© Chetan Sharma Consulting, All Rights Reserved Nov US Wireless Carriers: Net Adds

© Chetan Sharma Consulting, All Rights Reserved Nov Top 10 Carriers by Wireless Data Revenues

© Chetan Sharma Consulting, All Rights Reserved Nov Wireless Investments in 2006 Data Source: Rutberg

© Chetan Sharma Consulting, All Rights Reserved Nov About Chetan Sharma Consulting Over 12 years of wireless industry experience –Strategy, Product Planning, Intellectual Property, R&D Wrote one of the first books on Wireless Internet (2000). Coauthored 2 more since then. Numerous articles and reports. Advisor to leading companies and startups worldwide in the wireless industry on business, product, and IP strategy. Blog: