Consumers Want Cellular Data Service: CEA

ARLINGTON, VA. — Awareness of non-voice cellphone features and services is high among cellular owners and non-owners, and consumers who plan to buy a new cellphone in the next few years expressed a high degree of interest in subscribing to such services as email, Internet access, GPS navigation, and music and video services, a Consumer Electronics Association (CEA) consumer survey found.

Such interest in part explains the rising ownership rates of smartphones, CEA said in projecting rising factory-level sales of smartphones in 2008 but declining sales of all other cellphone types. U.S. factory-level smartphone sales will rise 31.7 percent in 2008 to 27.3 million units while sales of other types of cellphones will drop 1 percent to 116.4 million, CEA said.

Growing awareness of non-voice features and rising smartphone usage reflect carriers' aggressiveness in offering value-added services to maintain and expand their customer base and boost revenue now that the market is saturated, CEA said. The association estimates that 81 percent of the adult population owns a cellphone.

CEA's survey found that, among owners and non-owners alike, awareness of text messaging is highest, followed by awareness of ringtone downloads, Internet access, wireless email, picture taking and music services, in that order Although awareness of navigation was high, it nonetheless ranked lowest overall, with an awareness level of 52 percent among cellphone owners and 44 percent among non-owners.

Among all surveyed consumers, people planning to buy a phone within the next six months had the highest likelihood of subscribing to non-voice services with the exception of video, in which interest was highest among consumers intending to buy during the next few years. Among online adults surveyed, 16 percent said they would buy a phone within 6 months, with 24 percent saying they would in a year, 21 percent within two years, 5 percent within three years and 6 percent in more than three years. Only 5 percent said they never plan to buy a cellphone, and 24 percent weren't sure whether they'd ever buy a new cellphone.

Non-voice communications technologies such as text messaging, email and Internet access topped the list of services that planned purchasers and all surveyed adults said they were likely to buy. The results underscore that “cellphones are still overwhelmingly perceived as communications devices,” CEA said. Nonetheless, “the growing proliferation of smartphones will most likely help fuel opportunities for entertainment services,” CEA added.

Selling entertainment features, however, will likely be more challenging for carriers than selling non-voice communications features, particularly among light users who account for 56 percent of all cellphone users and use their phones two hours or less per week, CEA said. “This finding suggests this group uses their handsets primarily for communication and not for additional services such as entertainment,” CEA said. “Twenty percent of owners are heavy users who use their cellphones five or more hours per week, indicating a limited potential for [entertainment] service upgrades.”

For more on cellular market data, see p. 44 for a report on the Telcommunications Industry Association's 2008 Market Review and Forecast