North American wireless dodges economic crisis

The North American wireless industry is standing firm against the downturn and is set to grow in 2009, according to analyst projections this week.

Although North America was the first region to be affected by the economic crisis and has been the hardest hit, wireless operators’ results in the third quarter show how mobile services have become indispensable and two year contracts are protecting the sector in the region.

Industry analyst ovum notes that relative to other mature economies, both the US and Canada have low mobile penetration rates, at 85 per cent and 60 per cent respectively at the end of 2007, meaning that demand has not yet been met and growth in the mobile connections space is still possible.

US mobile operators added 3.9 million connections in the third quarter and year on year connections growth was 10 per cent. Only Sprint Nextel saw a decline in connections – of 1.3 million – that helped the other operators continue to grow strongly.

Canada’s wireless operators also saw connections growth, with Rogers’ subscriber base growing 8 per cent year on year, Bell Canada growing 7 per cent and Telus growing 10 per cent.

Steven Hartley, senior analyst at Ovum, also notes the significance of the fact that 79 per cent of new connections in the US in the third quarter were postpaid, while Canadian operators reported even higher figures, giving the carriers a little security for 2009.

In terms of growth areas, Hartley believes that operators could exploit the region’s relatively low penetration rates to grow the prepaid space – an area T-Mobile USA is known to be focusing on. “Assuming offerings are positioned carefully so as not to erode contract revenues, then the customer base could grow further in the currently underserved lower end segment,” Hartley said.

The North American market also reported strong growth in data services, with projections for more of the same continuing into 2009, also helping the regional mobile industry to dodge the effects of the downturn.