Wireless data service revenues in the United States grew 23 percent in the first quarter of 2011 compared with same quarter last year for a total of $15.4 billion, according to a new report from Chetan Sharma Consulting.

Revenues for wireless data services, which grew by 4 percent compared with the previous quarter, are on course to grow by 22 percent in 2011 to reach an annual total of $67 billion, according to The US Mobile Data Market Update 2011. AT&T and Verizon accounted for 76 percent of the increase in data revenues in the first quarter.

?The 4 percent quarter-over-quarter growth is pretty steady,? said Chetan Sharma, founder and president of Chetan Sharma Consulting, Issaquah, WA. ?The U.S. market has been able to sustain this growth for several quarters now.?

The biggest issues facing the mobile industry this year include the regulatory process for evaluating the proposed merger between AT&T and T-Mobile, spectrum issues, privacy and if Apple and Android will continue to build an insurmountable lead on the device front, per Mr. Sharma.

By sub-segment, the connected device category posted the highest rate of growth in the first quarter. The sub segment, which includes tablets, M2M, telematics and eReaders, increased by 9.6 percent compared with the previous quarter and now accounts for 8 percent of subscriptions.

Post-paid subscriptions were flat for the quarter.

Connected devices driving growth
?This means all the growth is coming from connected devices and players in the ecosystem need to figure out how to maximize their opportunity in this segment,? Mr. Sharma said. ?New post-paid subscriptions are hard to find so keeping them happy will be the No. 1 priority for the operators.?

The connected device segment grew by 9.6 percent compared to the previous quarter and 48 percent year?over-year. The report predicts connected devices will have a double-digit share of the market by the end of 2011.

Some sub-segments will struggle, however, until multi-device data pricing plans are introduced.

Such multi-device or family data plans should start being introduced in the U.S. market this year. Those operators who start to bundle multiple devices under a single data plan will see a better yield.

The average industry percentage contribution of data to the overall average price per user was 35 percent in the first quarter and could reach 40 percent by the end of the year.

The percentage share of data revenues is declining for messaging. However, revenue growth is still strong.

There is also a battle for market share between horizontal and vertical device platforms.

In the U.S., horizontal platforms have been gaining significant share, driven mostly by Android, and now have more than 65 percent of the new devices sold. Vertical platforms such as Apple, Research In Motion and Nokia have seen their share decline by 35 percent. 

However, these platforms still dominate when it comes to revenues and profits.

The big news in the first quarter was AT&T?s announcement that it would acquire T-Mobile.

However, the move wasn?t a surprise as T-Mobile has been having difficulties expanding its post-paid base. 

Also, most major mobile markets go through consolidation at some point, according to the report.

The top three carriers in the developed markets around the world control 94 percent of the marketing.

Privacy remains an issue
The proposed merger will have an impact on the structure of the U.S. market, with power being concentrated in the top two players. 

As a result, the level of concentration in the market will be at its highest in the history of the U.S. wireless industry, which is likely to draw interest from regulators.

The report points, however, to a weak regulatory framework in digital, which could be harmful to the mobile ecosystem if regulators are indecisive.

Regulators should be focused on the transparency of services and policies as opposed to the mechanics. Transparency, in fact, could be a competitive advantage for mobile brands.

The report expects the second quarter of 2011 to be dominated by heated debates around privacy and competition.

?Privacy/security can become a big issue,? Mr. Sharma said.

?Regulators are keen on doing something without completely understanding the implications of their actions,? he said. ?I feel there might be some overreaction.

?Industry needs to do a better job of devising better privacy solutions and being utterly transparent about data collection and usage,? Mr. Sharma said.

Final Take
Ericsson on mobile