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1st-Half Net Sub Growth Near Record Level: CTIA Survey

10/26/2004 08:58:00 AM Eastern

Washington — The number of new wireless-phone subscribers (net adds) grew to the second highest level in the industry’s history, the Cellular Telecommunications and Internet Association (CTIA) found in its semiannual carrier survey.

First-half net subscriber additions were up for the second consecutive year following two years of steep double-digit declines.

During January 2004 to June 2004, the net number of new subscribers (after churn) grew 47.2 percent to 10.7 million, up 47.2 percent from the year-ago period’s 7.3 million, which was up 18 percent from 2002’s first half, CTIA said. Net-new subscriber growth expanded the subscriber base to 169.5 million, up 14.5 percent from June 2003 levels.

Growth in net adds was the highest since a first-half peak of 11 million in 2000, which preceded two years of double-digit first-half declines. In percentage growth terms, this year’s first-half increase in net new subscribers was also the highest after first-half 2000’s 55.3 percent gain.

Besides net adds, other industry indices also rose in the first half, including the size of the average phone bill and the percentage of digital subscribers.

The average first-half phone bill rose for the sixth consecutive year, this time by a mere three cents, to $49.49.

By the end of June 2004, the percentage of subscribers using digital phones rose 12.3 percent to about 145 million compared to June 2003. About 86 percent of the subscriber base used a digital phone in midyear.

Carriers’ capital spending grew in the first half following two consecutive years of first-half declines. Capital spending grew 43.4 percent to $22.6 billion in the first half of 2004, compared to a 15.8 percent decline in the first half of 2003 and a 19 percent decline in the first half of 2002, CTIA statistics show. By the end of June, cumulative capital spending since the industry’s inception was $156.7 billion.

Much of that investment went into a resurgence in building new cell sites following two years in which the number of net new cell sites declined. The number of new cell sites built in the first half hit 26,649, up 18 percent from the year-ago period’s 16,369. That was preceded by 17,291 new sites in the first half of 2003 and 18,326 in the first half of 2002.

For its survey, CTIA received responses from 2,756 of the 3,201 cellular, PCS and ESMR systems operating in the United States. The association estimated statistics for the other systems.

Number Of % Gain In No. Total Subscriber
Net New Of Net New Average Base As Of
Period Subscribers Subscribers Phone Bill June 30
Jan.-June 1994 3,273,845 60.9% $58.65 19,283,306
Jan.-June 1995 4,019,994 22.8% $52.45 28,154,415
Jan.-June 1996 4,409,805 9.7% $48.84 38,195,466
Jan.-June 1997 4,662,561 5.7% $43.86 48,705,553
Jan.-June 1998 5,519,138 18.0% $39.88 60,831,431
Jan.-June 1999 7,075,432 28.8% $40.24 76,284,753
Jan.-June 2000 10,988,922 55.3% $45.15 97,035,925
Jan.-June 2001 8,919,703 -18.8% $45.56 118,397,734
Jan.-June 2002 6,186,858 -30.6% $47.42 134,561,370
Jan.-June 2003 7,298,982 +18.0% $49.46 148,065,824
Jan.-June 2004 10,745,412 +47.2% $49.49 169,467,393 (+14.5%)
(Includes cellular, PCS, and ESMR subscribers)
Source: Cellular Telecommunications and Internet Association, Washington DC
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