Great stuff as per usual, and thanks for kind words about my book.

About that F&S forecast for the US subscription penetration rate and the US cellphone population.

I totally agree with the general forecast direction, that the subscription count will pass the total population count.

My gut says it will happen faster than this. F&S says 100% subscription penetration in 2012. I’m pretty sure it’ll happen faster, and my guess would be 2010.

With handsets F&S seems to think the number of handsets will plateau and not reach the total population.

I disagree with that, I am sure also the total number of handsets will grow past the total US population, as increasingly many employed young adults will carry two phones, think iPhone user who also has a Blackberry.

So, let me first give some background to the F&S forecast, while not knowing specifically the forecasters of F&S (I do work with them, but their London office, and don’t know the analysts nor the process by which this forecast was made). The general assumption in the telecoms industry has had a strong, long-held assumption, that subscriber growth is very near saturation. We heard that when penetration rates passed 50% of human population (at a time when landline penetration was 60%). We heard it again at 60%, then at 70% then at 80%, 90%, 100% and 110% and 120%. As you know CEO, but perhaps your readers might not, the European penetration level is already at 110% and leading countries are past 135% (like Italy, Taiwan, Hong Kong, Israel etc).

So it makes “sense” for F&S to be cautious in their forecast, trying to conform with a general more-or-less consensus view, that cellphone subscriber penetration rates cannot keep on growing, they have to be near saturation by now. And the area where that feeling is strongest held still today, is America, so American analysts do tend to think that 100% is a natural barrier for penetratoin (babies don’t need phones).

We’ve of course witnessed the breaking of that myth in more than 60 countries already, but it still guides a lot of the assumptions about penetration rates.

The reason I think the subscriber growth will be faster than this, is that by my analysis, the two major accelerators to subscriber growth are a) the availabilty of prepaid (pay-as-you-go) accounts; and b) subsidies to handsets. So that is why Italy shot ahead of Finland in the late 1990s in the national penetration race, because Italy (and Portugal) introduced prepaid accounts, which spread the cellphone to a far less affluent part of society, where the recepient can still receive calls and messages, even if they can’t afford to place them (oh, and an important point here, almost all of the rest of the world has already abandoned the archaic payment method, where a cellphone owner is charged both for placing calls and receiving calls (and messages). In the rest of the world we only pay if we call or send messages, receiving them is free. But sorry, I am digressing.

Yes, the other matter that accelerates growth is the subsidised handset. Low cost, and even free phones. Your readers might think that this is the “natural state” of cellphones, but no, many countries don’t have subsidies at all, either being illegal, or the industry has managed to get rid of them. Finland, Belgium, South Korea and Israel are examples of such countries. The fact that the UK had subsidised phones, and Finland didn’t, helped the UK pass Finland in national penetration rates.

Now, with these two factors helping boost the US market, I think the US growth rate, from the 90% level where it is now, to the 100% level, will actually be stronger than for an average industrialized country that went through the same stage (US is second-to-last in penetration rates today among Industrialized Countries, ahead only of Canada – so we have a lot of examples from other countries that we can study).

I generally have pegged the US industry to be about 3 years behind the UK in the cellular phone industry (the world leader is Japan). But the US has been moving faster up that ladder – as CEO knows as I have the table in the book of the 25 leading countries in mobile telecoms. Today the US lags the UK only 2 years and lags Japan only a little more than 3 years. It is partly an “iPhone effect” of the US industry finally waking up to the cellphone opportunity (although, I can’t believe this lunacy about AT&T now RAISING prices for SMS, what kind of idiots are they? But I digress)

Anyway, I wanted to offer my alternate view. We’ll know soon enough. But your readers should consider that F&S forecast – and that I agree with it – but then consider also, that Tomi Ahonen – who after all was the first expert to discuss the multiple subscription phenomenon when we first spotted it in Finland in 1998 – says it is likely to be faster growth than this. If the evidence suggests the growth pattern is similar to F&S, then Tomi was wrong, and you can plan on that forecast. If you notice the numbers next year trend above the F&S forecast, then it is likely Tomi was closer to the mark, ha-ha, and you’ll be better served in preparing for that future.

Just some alterate views here at the end of the year 2008. Happy new year to all readers of the About Mobility blog.

Tomi T Ahonen
http://www.tomiahonen.com