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Cellular Penetration Hits Record Despite Net-New Subscriber Drop

10/24/2007 07:43:00 AM Eastern

Washington — The cellular industry showed signs of maturity in the first half of 2007, when penetration grew to an all-time high of 80.5 percent of the total U.S. population while the number of net new subscribers fell for the second consecutive year, CTIA statistics show.

First-half carrier revenues returned to double-digit growth rates after a lapse of one year, CTIA also found.

The number of net new subscribers (after churn) fell 10.8 percent to 10.5 million in the first half of 2007 following a revised 4.7 percent decline in the year-ago period, the association said. That followed three years of double-digit percentage-rate surges. Nonetheless, this year’s 10.5 million first-half gain was the fifth largest first-half gain in the industry’s history, the statistics show.

With the additional 10.5 million subscribers, the subscriber base grew to 243.4 million at the end of June, up 10.8 percent from June 2006’s 219.7 million.

80.5 Percent Penetration: The subscriber-base expansion put the cellular penetration rate at the end of June to 80.5 percent of all 302.2 million men, women and children living in the United States by July 1, according to Census Bureau estimates. That’s up from 73.4 percent at the end of June 2006, 65.6 percent at the end of June 2005, and 57.7 percent at the end of June 2004. The cellular population exceeded half of the U.S. resident population for the first time at the end of June 2003, when the penetration rate hit 50.9 percent.

Double-Digit Revenue Gains: Like maturing baby boomers entering their prime earnings years, the cellular industry earned more money in the first half, when total voice and data revues grew 12.3 percent over the first half of 2006 to $67.9 billion. The growth rate exceeded the first-half 2006 growth rate of 8.6 percent, which marked the first-ever single-digit percentage gain in first-half carrier revenues. First-half gains in previous years were 13 percent in 2005, 19 percent in 2004, and 12.7 percent in 2003.

The double-digit percentage revenue gain came despite only a tiny increase in the average June cellphone bill to $49.94 from $49.30. Average June phone bills have been stuck in the $49 range since June 2003.

Average June bills were up slightly despite a double-digit gain in the amount of time that subscribers talk over their phones, the statistics show. Wireless subscribers used more than 1 trillion minutes of talk time in the first six months of 2007, up about 18 percent from 850 billion minutes during the year-ago period.

Besides talking more, cellular subscribers also used wireless-data services more, CTIA found. Wireless data revenues in the first half hit $10.5 billion, up 63 percent from the first half of 2006 to account for 15.5 percent of all wireless service revenues, up from 11 percent in the first half of 2006, the association said.

To handle the capacity, carriers continued to build more cell sites in the first half. The number of sites in June 2007 was up 6.5 percent over June 2006 to 210,360 sites. The percentage gain, however, is down from the June 2006 year-over-year gain of 11 percent. The industry posted a 2 percent gain in new cell sites in the first half of 2005 and an 18 percent gain in the first half of 2004.

CTIA developed the statistics from a survey of carriers serving 97 percent of all wireless subscribers. Estimates were compiled for systems that did not respond.

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