Europe is home to many of the most highly penetrated mobile markets in the world and to several of the leading global cellular investment groups, such as Vodafone, Telefonica, Deutsche Telekom and Mobile TeleSystems (MTS).
Yet as consumers in Europe increasingly treat mobile voice services as a commodity, the region’s mobile industry is entering a new paradigm; operators must find the best way to adjust their business models to support users’ appetite to communicate via the Internet anywhere and at any time.

Retail prices for mobile broadband access have plummeted in Europe over the past two years and industry professionals in markets such as Austria and Sweden, where flat-rate packages are available for less than €10 per month, are increasingly questioning whether such low prices are sustainable. Operators’ revenues are meanwhile being squeezed by cuts in mobile termination rates and caps on roaming rates mandated by the EU.

The popularity of mobile broadband access, combined with the arrival of the iPhone and similar touch-screen devices has caused a surge in traffic on mobile networks. As a result, operators are being forced to balance the forecast need for investment in higher network capacity and speeds, with cost controls and capex constraints as they feel the pressures of the economic downturn. Sweden and Norway have already awarded 2.6GHz licenses, beckoning the arrival of LTE in Europe from late 2010.

Falling sales of mobile handsets, especially mid-range devices, have gone hand-in-hand with a rise in sales of SIM-only deals in markets such as the UK and Germany. Operators in Russia and the CIS, in contrast, are moving to gain more control over handset distribution and sales in order to better integrate their businesses across the entire value chain.

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