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Cell Penetration Hits Record

Washington — The cellular market showed signs of maturity in the first half, when the cellular penetration rate grew to almost three-quarters of the resident U.S. population despite the first decline in the number of net new subscribers in four years, CTIA statistics show.

The number of net new subscribers (after churn) fell 6.6 percent to 11.5 million following three years of double-digit percentage-rate surges. Nonetheless, at 11.5 million, the industry scored its second highest first-half net-new subscriber gain, exceeded only by last year’s first-half gain of 12.4 million, CTIA statistics show.

With the additional 11.5 million subscribers, the subscriber base grew to 219.4 million at the end of June, up 24.9 million, or 12.8 percent, from June 2005’s 194.5 million. The 24.9 million subscriber-base expansion fell only slightly short of last year’s first-half subscriber-base gain of 25 million.

73.4 Percent Penetration: The subscriber-base expansion put the cellular penetration rate at the end of June to 73.4 percent of the resident U.S. population, based on Census Bureau population estimates. That’s up from 65.6 percent at the end of June 2005 and 57.7 percent at the end of June 2004, based on a combination of Census Bureau and CTIA statistics. 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.

To be sure, it would have been a major undertaking for the cellular industry to beat last year’s first-half net-new subscriber growth, given already-high penetration rates and last year’s historic surge in the number of net new subscribers.

Single-Digit Revenue Gains: In another sign of maturity, the industry posted a first-half revenue gain of only 8.6 percent to $60.5 billion, marking the first-ever single-digit percentage gain in first-half carrier revenues. First-half gains in recent years were 13 percent in 2005, 19 percent in 2004, and 12.7 percent in 2003.

Slower revenue growth can be attributed in large part to relatively flat average monthly phone bills, which partially offset the expanded subscriber base. June’s average phone bill was $49.30, down slightly from the previous June’s $49.52. Average June phone bills have been stuck in the $49 range since June 2003, when they spiked up from the previous June’s $47.42. Average June phone bills hit their lowest level in 1998, when the average June bill was $39.88.

Average bills were flat despite a double-digit gain in the amount of time that subscribers talk and send data over their phones, the statistics show. Wireless subscribers use more than 850 billion voice minutes in the first half, up 27 percent from the year-ago period, CTIA said.

Carrier revenue from data services rose 70 percent in the first half to $6.5 billion, accounting for 11 percent of all carrier revenues. Those revenues included income from 12.5 billion text messages sent in June alone, up 72 percent from June 2005, and 1.1 billion MMS (multimedia messaging service) messages sent in the first half, equal to the number of MMS messages sent in all of 2005.

Although carrier revenue growth slowed, carriers spent more in the first half on building new cell sites than they did during the year-ago period. The number of cell sites grew 11 percent to 197,576 during the January-June period. During the year-ago period, the number of cell sites was up only 2 percent to 178,025. During the first half of 2004, however, the number of sites shot up 18 percent to 174,368.

CTIA developed the statistics from a survey of carriers representing 97.2 percent of all wireless subscribers. Estimates were compiled for systems that did not respond.

First Half Wireless Phone Subscribers Gain