2011 was the first year that global consumer spending on media content, apps and services for mobile phones broke through the $100 billion barrier, according to Strategy Analytics.
But there is an important caveat: 60 percent of that spending was for broadband access. In other words, some $73 billion was spent by consumers for mobile data access. In 2012, mobile data will represent $82.8 billion in spending, up 9.5 percent over 2011 levels.
The observation that “access” often accounts for a majority of all revenue earned in an Internet-related ecosystem often is obscured, in large part because it seems a transitory relationship.
Nearly two decades ago, giving a speech to a group of Internet Service Providers, at a time when that meant “dial-up,” I made an observation that most of the money actually earned in the Internet ecosystem was made in “access revenues.”
Of course, that relationship didn’t last long. Dial-up largely ceased to be a business, as broadband access supplanted it. But something else more important ultimately happened, namely the growth of huge revenue streams based on advertising, marketing or device parts of the Internet ecosystem.
In 2011, about $42 billion was earned by providers of fixed network broadband access. That same year, online advertising revenue was about $31 billion, according to the Interactive Advertising Bureau.
Of course, over time, while access revenue grows in linear fashion, online advertising grows somewhat more non-linearly, at arguably faster rates.
Still, it is worth noting that in the mobile part of the ecosystem, access revenues still represent the lion’s share of revenue. Over time, the gap will narrow, of course.
Apps are now the second largest category for revenues. Advertiser spending on mobile media is expected to almost double (85.4 percent growth) from $6.3 billion to $11.6 billion in 2012, Strategy Analytics says.
That implies $149.8 billion in global revenue in 2012, a 17 percent increase over 2011.
Apps are expected to account for about 19 percent of global consumer spending in 2012, amounting to $26.1 billion, up about 31 percent over 2011.
In some ways, the respective sizes of businesses that use broadband, compared to the sale of access, are not unusual. The revenue generated by all businesses that use electricity, roads, airports, gasoline and water are far larger than the revenues earned by selling those key underlying products.
Over time, those economics will prevail in both fixed and mobile broadband access services.
Edited by
Jennifer Russell
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