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Summary:

Increased competition and the emergence of mobile societies in Brazil, China and India, along with the introduction of flat-rate plans in the U.S., have resulted in a big jump in call volumes on mobile networks between 2001 and 2010, a report finds.

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I was one of the early converts to mobile phones. Despite their high prices, I found the convenience worth it. But when the flat-rate unlimited plans came around, I totally got rid of my landline and despite the spotty coverage became completely untethered. With falling prices my call volume increased. So it is hardly a surprise (and almost obvious) to find a study showing that falling prices boost the minutes used on mobile networks.

On Thursday GSMA’s Wireless Intelligence released a report that shows that in 2010 there were 1.6 trillion global voice minutes, a whopping ten times the minutes in 2001, when there were 170 billion minutes of voice calls. Or, as the report points out, the usage of mobile phones has grown “twice as fast as the number of connections, which grew from around 950 million to 5.4 billion over the same nine year period.”

This is equivalent to an increase from three to five hours of call time per user per month across the world, and has come about as a result of a simultaneous drop in the effective price per minute (EPPM) of calls to a quarter of what it was nine years previously. Average prices in the developing world declined at more than twice the rate of those in the developed world over this period, and as a result the reported average minutes per user per month (MoU) is now broadly the same across the two regions.

The average worldwide effective price per minute (EPPM) for voice calls fell 73 percent from 2001 and 2010, down from 32 cents to 9 cents. At the same time, the average worldwide minutes of use per user per month (MoU) has over the same period jumped by two-thirds, from 178 minutes in 2001 to 296 minutes in 2010 — or from three hours of talk time per month to five hours per month.

A big reason for the price decline has been the rise of Brazil, India and China as mobile societies, in addition to flat-rate plans being introduced in the U.S. In comparison, we have Western Europe, where the minutes of usage have been relatively flat — 150 minutes per user per month — even though overall EPPM fell from 30 cents in 2005 to 20 cents in 2010.

According to the research, every penny decline in EPPM equals an increase of about 5.6 minutes calling time per month for every mobile user in the world. The call volumes go up ever more in the developing world, 13.5 minutes versus 6.9 minutes in the developed world.

The falling call prices are a good reason why carriers have embraced the data business and are doing their best to milk it for what its worth. As voice minutes become more commoditized, I bet we are going to see more tolls being placed on the wireless Internet. Thoughts?

  1. Seems like everything’s going IP, and mobile. Sure hope you keep us posted on any companies out there with killer tech that can figure out how to push far more through our meager 3G networks.

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  2. Nice article. The EPPM dropped, in highly competitive markets such as the United States, Indonesia, China and India, partly due to the increased competition created by the more spectrally efficient CDMA technology. Competition is good for consumers.

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