CTIA s Wireless Metrics Reports Bobby Franklin Executive Vice President CTIA-The Wireless Association April 30, 2009
Background on Semi-Annual Survey CTIA s survey began in January 1985 focusing on operational cellular companies. Expanded in the 1990s to include new Personal Communications Service and Enhanced Specialized Mobile Radio operators. A voluntary and confidential survey, it now captures results for companies serving 96% of all estimated wireless subscribers. Includes all Tier 1 operators, most Tier 2 operators, and a sampling of Tier 3 operators. Now also includes major MVNOs to provide broader snapshot of the prepaid service market. Results are used to inform policymakers and to produce benchmarking reports the comprehensive all-industry Wireless Industry Indices report and the special Tier 3 Operators report for responding companies. 2
Background on CTIA s Reports Providing a Review of Reported and Derived Wireless Metrics Subscribership (total, prepaid, gross adds, and retention) Revenues (total, roaming, and data and average bills) Investment (incremental investment) Employees (total, sales and other employees) Facilities (cell sites, base stations, switches) Traffic (MOUs, calls, SMS & MMS Message Volumes, Traffic Balance) The Indices report also includes comparisons of wireless and wireline metrics drawn from other sources e.g., the Bureau of Labor Statistics (BLS), FCC, and the National Center for Health Statistics (NCHS). 3
Year-end 2008 Survey Details At year-end 2008, more than 150 wireless companies served more than 270.3 million subscribers in the U.S., a figure that grew almost 15 million between December 2007 and December 2008. Participating wireless companies reported serving 259.8 million subscribers at year-end 2008. Non-responding companies (publicly-traded and privatelyowned) served 10.5 million subscribers at year-end. 48.2 million of the 270.3 million total active subscriptions were prepaid or pay-as-you-go subscriptions. 4
270,333,881 255,395,599 233,040,781 207,896,198 Dec-08 Dec-07 Dec-06 Dec-05 5 182,140,362 Dec-04 As of Dec. 2008, There Were More Than 270.3 Million Wireless Subscribers in the U.S. 300,000,000 250,000,000 158,721,981 140,766,842 128,374,512 109,478,031 86,047,003 69,209,321 55,312,293 44,042,992 33,758,661 24,134,421 16,009,461 11,032,753 7,557,148 5,283,055 3,508,944 2,069,441 1,230,855 681,825 340,213 200,000,000 150,000,000 100,000,000 50,000,000 0 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 Dec-89 Dec-88 Dec-87 Dec-86 Dec-85 Source: CTIA Semi-Annual Survey
30,000,000 25,000,000 20,000,000 Annual Net Adds 15,000,000 10,000,000 5,000,000 0 6 Total Subscribership is Up, Derived Net Adds Are Down Wireless Subscriber Growth, 1991-2008 14,938,282 22,354,818 25,144,583 25,755,836 23,418,381 23,431,028 300,000,000 250,000,000 270,333,881 255,395,599 233,040,781 207,896,198 182,140,362 17,955,139 158,721,981 12,392,330 140,766,842 18,896,481 128,374,512 109,478,031 16,837,682 86,047,003 13,897,028 69,209,321 11,269,301 55,312,293 10,284,331 44,042,992 9,624,240 33,758,661 8,124,960 24,134,421 4,976,708 16,009,461 11,032,753 3,475,605 7,557,148 200,000,000 150,000,000 100,000,000 50,000,000 0 Ending Subscribers 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Ending Subscribers Annual Changes
Background on Revenue Metrics ARPU, the Average Local Monthly Bill and Data CTIA has tracked the average local monthly bill since the late 1980s, and now also calculates ARPU based on differing definitions and components (e.g., including or excluding toll revenues, including or excluding roaming revenues), recognizing different methods may be used by individual carriers. The average local monthly bill remains a standard benchmark across carriers. The percentage that wireless data composes of the average bill or ARPU is also calculated (23% in the last half of 2008). CTIA does NOT track price or cost information. CTIA strictly follows the antitrust guidelines for trade association-sponsored surveys. 7
CTIA s Average Local Monthly Bill 8 $98.02 $89.30 $100 $90 $56.21 $68.68 $61.49 $80.90 $72.74 $80 $70 $60 $50.07 $49.79 $50.56 $49.98 $50.64 $49.91 $48.40 $47.37 $45.27 $41.24 $39.43 $47.70 $42.78 $51.00 $50 $40 $30 $20 $10 $0 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 Dec-89 Dec-88 The Average Local Monthly Bill is Up 0.6 Percent Year-over-Year Source: CTIA Semi-Annual Survey
23.3% 76.7% Dec-08 9 17.9% 15.5% 13.5% 82.1% 84.5% 86.5% Wireless Data as a Percentage of Monthly Subscriber ARPU 20.3% 10.7% 8.3% 6.8% 4.8% 4.1% 2.5% 1.7% 1.2% 1.1% 0.9% 0.6% 0.4% 0.4% 0.2% 0.1% 100% 90% 80% 70% 60% 79.7% Dec-07 Jun-07 Dec-06 ARPU is Increasingly Composed of Wireless Data 89.3% 91.7% 93.2% 95.2% 95.9% 97.5% 98.3% 98.8% 98.9% 99.1% 99.4% 99.6% 99.6% 99.8% 99.9% 50% 40% 30% 20% 10% 0% Jun-08 Jun-06 Dec-05 Jun-05 Dec-04 Jun-04 Dec-03 Jun-03 Dec-02 Jun-02 Dec-01 Jun-01 Dec-00 Jun-00 Dec-99 Jun-99 Non-Data ARPU Data ARPU Source: CTIA Semi-Annual Survey
Users Generate Billions in Wireless Service Revenues $75,355,406 $72,728,764 $70,981,636 $67,887,668 $65,006,156 $60,450,669 $57,849,013 $55,689,208 $52,845,539 $49,275,671 $46,239,922 $41,384,171 $39,801,101 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 Six-Month Data Revenues Grow 38% Year-Over-Year in Thousands $493,250 $17,536,852 $14,784,297 $12,696,252 $10,532,277 $8,756,174 $6,460,560 $4,791,204 $3,790,579 $2,559,441 $2,041,090 $1,158,300 $699,764 $30,000,000 $20,000,000 $10,000,000 $0 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Total Wireless Industry Revenues Data Service Revenues 10 Source: CTIA Semi-Annual Survey
Most Reported Wireless Revenue Growth is in Data $160,000,000 $32,321,149 $140,000,000 $23,228,529 $15,216,735 $120,000,000 $8,581,783 $100,000,000 $4,600,531 in Thousands $80,000,000 $60,000,000 $40,000,000 $904,704 $75,603,482 $1,858,064 $85,766,029 $97,520,679 $104,956,438 $110,240,090 $115,640,775 $115,763,021 $20,000,000 $0 2002 2003 2004 2005 2006 2007 2008 Total Annual Revenues - Excluding Data W ire le ss Da ta Re venue s 11 Source: CTIA Semi-Annual Survey
$160,000,000 $140,000,000 $120,000,000 Revenues in Thousands $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 12 While a Shrinking Percentage is Roaming Revenue 12.0% $3,739,274 $3,742,014 10.6% 10.2% 10.0% $3,494,294 $3,786,331 $4,210,331 $3,766,267 $3,895,512 7.4% 6.4% 8.0% 4.1% 3.3% 2.8% 5.1% 4.3% 2.7% 2.5% 6.0% $3,936,445 4.0% $3,882,981 $4,085,417 $3,500,469 Roaming as a % of Total Revenues $144,344,896 $135,127,290 $121,962,531 $109,751,890 $97,910,879 $83,857,826 $72,612,675 $57,994,373 $48,583,039 $35,933,072 $29,632,706 2.0% 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Non-Roaming Revenues Annual Roaming Revenues Roaming as a % of Total Revenues Source: CTIA Semi-Annual Survey
Background on Investment Comparative Reported Capex and Derived Ratios CTIA originally tracked cumulative capital investment in operational systems (including network and non-network investment e.g., office plant, vehicles, etc.) CTIA now tracks incremental investment in these systems (at all times excluding the cost of spectrum) CTIA does not track opex, nor does it track EBITDA. The revenue and capex figures CTIA tracks can be used with other data to derive a number of operational metrics or ratios: Incremental capex to revenues Incremental capex per ending subscriber (or incremental sub) Total / local revenue per ending subscriber Subscribers per employee Total revenue per employee Other employees to sales employees 13
Incremental Investment Total reported incremental investment for 2008 amounted to $20.1 billion, down slightly from 2007. In 2007, wireless carriers reported investing more than $21 billion in their operational networks (not including investments in pre-operational 3G and 4G systems). Responding wireless licensees together invested an average of $24.5 billion a year in their networks from 2001 to 2006. New Incremental data can be summed with previously-reported cumulative data to reach a new cumulative capex figure. 14
Reported Incremental Capex in Operational Systems $30,000 $25,000 $25,232 $24,424 $21,142 $20,000 $20,169 Millions $15,000 $10,000 $5,000 $0 2005 2006 2007 2008 Source: CTIA Semi-Annual Survey Reported Incremental Capex 15
Total Annual Wireless Capex Wireless Carrier Capital Expenditures for Structures and Equipment $30,000 $27,283 $27,894 $25,000 $25,263 $24,007 $22,997 $20,972 $23,963 $22,187 $20,000 Millions $15,000 $14,376 $10,000 $8,222 $5,000 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: U.S. Census Annual Census of Expenditures 16
$264,760,517 $244,591,206 $223,449,194 $199,025,327 Dec-08 Dec-07 Dec-06 Dec-05 17 Derived Cumulative Wireless Investment Cumulative Wireless CapEx Reached More Than $264 Billion at Year-End 2008 $300,000,000 $250,000,000 $173,793,507 $145,866,914 $126,922,347 $105,030,101 $89,624,387 $71,264,865 $60,542,774 $46,057,910 $32,573,522 $24,080,467 $18,938,678 $13,956,366 $11,262,070 $8,671,544 $6,281,596 $4,480,142 $3,274,105 $2,234,635 $1,436,753 $911,167 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 Thousands Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 Dec-89 Dec-88 Dec-87 Dec-86 Dec-85 Source: CTIA Semi-Annual Survey
Background on Facility Metrics Cell Sites, Base Stations and Switches CTIA s survey asks for cell sites, base stations, and switches; it does not ask for other facilities (e.g., backhaul, power supply, or towers ). CTIA s survey does not distinguish between technology types (CDMA, GSM, HSPA, iden) or generations of technology. CTIA s survey does not include a collocation offset. CTIA requests aggregate data about operational units only not pre-operational facilities. Ratios can be derived for: Subscribers per cell site Capex per cell site Base stations per cell site Cell sites per switch 18
The Number of Operational Cell Sites 250,000 242,130 225,000 213,299 200,000 175,000 162,986 183,689 175,725 195,613 150,000 125,000 127,540 139,338 100,000 81,698 104,288 75,000 65,887 50,000 51,600 25,000 10,307 12,824 17,920 22,663 30,045 0 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Cell Sites in Service are Up 13.5 Percent Year-over-Year 19 Source: CTIA Semi-Annual Survey
Direct Carrier Employees 300,000 268,528 266,782 253,793 233,067 250,000 226,016 205,629 192,410 203,580 184,449 200,000 155,817 134,754 150,000 109,387 84,161 100,000 68,165 53,902 39,810 34,348 26,327 21,382 15,927 50,000 11,400 7,147 4,334 2,727 0 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 Dec-89 Dec-88 Dec-87 Dec-86 Dec-85 Direct Wireless Carrier Employment Grows 0.7% Year-over-Year 20 Direct Employment Exceeds 268,000 at Year-End 2008 Source: CTIA Semi-Annual Survey
Background on Traffic Metrics MOUs, Calls and Messages Since 1991, the survey has tracked billable MOUs and calls. This has allowed calculation of average length of calls (local, roaming, and more recently prepaid) and average monthly MOU volumes per subscriber over time. More recently, traffic balance information has been requested (wireless-to-landline, landline-to-wireless, wireless-to-wireless). MMS and SMS / Text message volumes are now requested in the wireless data supplement to the traditional survey. Data can be presented in six-month and annual increments, or attributed to an average monthly level. 21
In 2008 Wireless Consumers Used 2.2 Trillion Minutes 2,200 2,000 1,800 1,600 1,400 Billions 1,200 1,000 800 600 400 200 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 22 Source: CTIA Semi-Annual Survey
And Billions of Text and MMS Messages, and More Minutes and Messages as a Measure of Wireless Usage 3,500 3,000 These measures don't even include the traffic generated by millions of wireless users browsing the web, downloading music and games, or accessing other content with their wireless devices. 15 Billions of MOUs / Messages 2,500 2,000 1,500 1,000 1 81 1,495 3 159 1,798 1,005 6 363 2,119 2,203 500 0 2005 2006 2007 2008 Source: CTIA Semi-Annual Survey MOUs Text Messages MMS Messages 23
Average Monthly Minutes per Subscriber Trended 900 800 700 600 500 400 300 200 100 0 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Source: CTIA Semi-Annual Survey Average Monthly Usage of Voice Minutes 24
Average Monthly Minutes and Text Messages Per Subscriber Trended 900 800 700 600 500 400 300 200 100 0 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Source: CTIA Semi-Annual Survey Average Monthly Usage of Voice Minutes Average Monthly Text Messages 25
Another Way of Looking at Combined Average Messages per Subscriber per Month (MOUs and Texts) 1,250 1,125 1,000 875 750 625 500 375 250 125 0 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Average Monthly Usage of Voice Minutes Average Monthly Text Messages Source: CTIA Semi-Annual Survey 26
Background on Wireless-Wireline Comparisons The Indices report includes data on the wireline industry drawn from multiple reports, including FCC, Universal Service Administrative Company (USAC), and Bureau of Labor Statistics (BLS) data on: Number of ILEC access lines (end user and special access) Number of CLEC lines ILEC revenues Index trends The report draws upon multiple sources to provide the supplemental information to help put the wireless industry s performance into context. 27
National Wireless, ILEC and CLEC Subscriber Trends Through December 2007 500,000,000 450,000,000 400,000,000 350,000,000 300,000,000 250,000,000 200,000,000 86,047,003 8,194,243 109,478,031 14,871,409 182,140,362 158,721,981 140,766,842 128,374,512 19,653,441 24,863,691 29,775,438 32,880,812 207,896,198 31,387,839 233,040,781 28,625,971 255,395,599 28,716,591 150,000,000 100,000,000 50,000,000 173,871,183 183,434,430 187,804,360 188,500,486 185,401,213 179,930,319 172,733,606 165,946,610 157,022,719 0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 USAC ILEC Line Counts CLECs Wireless 28 Sources: CTIA Semi-Annual Survey, FCC Local Competition Report, USAC FCC Filings
National Data Shows Competitive Markets Associated with Most Dramatic Price Index Declines (Consumer Price Index Category Titles per Bureau of Labor Statistics) 147 144 141 138 135 132 129 126 123 120 117 114 111 108 105 102 99 96 93 90 87 84 81 78 75 72 69 66 63 60 Jun-08 Mar-08 Dec-07 Sep-07 Jun-07 Mar-07 Dec-06 Sep-06 Jun-06 Mar-06 Dec-05 Sep-05 Jun-05 Mar-05 Dec-04 Sep-04 Jun-04 Mar-04 Dec-03 Sep-03 Jun-03 Mar-03 Dec-02 Sep-02 Jun-02 Mar-02 Dec-01 Sep-01 Jun-01 Mar-01 Dec-00 Sep-00 Jun-00 Mar-00 Dec-99 Sep-99 Jun-99 Mar-99 Dec-98 Sep-98 Jun-98 Mar-98 Dec-97 Telephone services Local Telephone Service Long Distance Charges Cellular Telephone Services Interstate Toll Service Intrastate Toll Service 29 Source: Bureau of Labor Statistics
Comparative Household Telecom Expenditures Source: FCC Trends in Telephone Service report, Aug. 2008 30
Wireless-Only Households in the U.S. 20.0% 18.0% 17.5% 16.0% 15.8% 14.0% 12.8% 13.6% 12.0% 10.5% 10.0% 8.4% 8.0% 7.3% 6.0% 5.0% 6.1% 4.0% 2.0% 0.0% Jan - June 2004 July - Dec. 2004 Jan - June 2005 July - Dec. 2005 Jan - June 2006 July - Dec. 2006 Jan - June 2007 July - Dec. 2007 Jan - June 2008 Source: National Center for Health Statistics (NCHS) January-June 2008 National Health Interview Survey 31
Wireless-Only Households Across the States 32 Source: NCHS, Wireless Substitution: State-level Estimates From the National Health Interview Survey, January December 2007
Wireless-Only Adults In Urban and Non-Urban Areas 20 Percentage of Adults with Only Wireless Telephones: Metropolitan and Non-Metropolitan Areas 18 17.5 16 15.5 Percentage Wireless-Only 14 12 10 8 6 4 2 3.1 1.8 3.8 5.0 2.8 2.9 6.3 3.4 7.7 4.1 8.7 5.1 10.3 7.0 12.7 8.0 13.7 8.4 10.0 10.9 0 Jan - June 2003 July - Dec 2003 Jan - June 2004 July - Dec 2004 Jan - June 2005 July - Dec 2005 Jan - June 2006 July - Dec 2006 Jan - June 2007 July - Dec 2007 Jan. - June 2008 Metropolitan Not Metropolitan Source: NCHS, Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, Jan. June 2008 33
76 % of Households Have Wireless Today 120.0% 100.0% 13.2% 13.8% 10.3% 10.2% 1.7% 1.3% 0.9% 1.9% 2.2% 2.5% 80.0% 1.9% 1.9% 2.0% 2.2% 23.8% 21.8% 20.6% 30.9% 29.6% 34.4% 32.4% 60.0% 40.0% 58.9% 58.8% 58.5% 42.4% 42.6% 45.6% 44.3% 20.0% 0.0% 7.3% 8.4% 10.5% 12.8% 13.6% 15.8% 17.5% Jan - June 2005 July - Dec. 2005 Jan - June 2006 July - Dec. 2006 Jan - June 2007 July - Dec. 2007 Jan - June 2008 Wireless-Only Households Landline Households without a Wireless Phone Landline Households with Unknown Wireless Status Landline Households with a Wireless Phone Phoneless Households 34 Source: NCHS, Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, Jan. June 2008
A Taste of Additional Metrics CTIA s reports provide the facts and the context for understanding the state of the wireless industry, and the basis for benchmarks of wireless performance. These benchmarks include such additional metrics and ratios as the following all-industry figures: Six-Month Capex as a % of Revenues: 14.0 % as of 2H2008 Six-Month Revenues per Employee: $280,623 as of 2H2008 Subscribers per Employee: 967 to 1 as of 2H2008 Subscribers per Cell Site: 1,073 to 1 as of 2H2008 Incremental Capex per Ending Subscriber: $40.71 as of 2H2008 These and similar metrics and ratios appear in the Tier 3 operators report. 35
Thank you. Questions?