"Human penetration"

Thomas Husson | March 06, 2008, 04:38 AM

I came across this strange expression in a Mobistar analyst presentation, mentionning that "human penetration" had reached 84% on the Belgian mobile market for 2007. This obviously refers to individual penetration (end-user owning a mobile phone) by opposition to SIM card penetration / connections.

At Jupiter, we value this approach since it is based on the end-user, the consumer and we did lots of modelling by looking at penetration among age groups, the only way to really assess market reality. Yes, operators are increasinly targeting digital youth and kids (as well as senior people) but there will always be a ceiling in adoption.

This also is defined by opposition to Machine to Machine (M2M) connections that begin to be reported in operators' KPIs. Still a very small percentage today but one that will make operators' figures even more complex moving forward.

Indeed the fact that most European countries are above the 100% penetration mark (SIM-based) is essentially driven by two facts:

- making the split between private and professional calls (a percentage that decreased between 06 and 07 according to Mobistar market research)

- benefiting from price advantages via several SIMs (increasing significantly according to the operator). You just need to look at the Italian market to understand that this trend is not really new but will impact the market (particularly when prepay and SIM-only penetration is high).

There are other reasons like on-net / family offerings and security issues but none of them seem to be a major driver.

When you look into details on how operators report their figures, it begins to be a mess:

- some operators split residential and business users, some others don't
- some operators include MVNO subs, some other don't
- some report active users on a 90 days basis, some others still on a 180 days basis
- definitions vary a lot, particularly for data connections and revenues

I am not a financial analyst so that's not really big deal even though I find it increasingly complex to follow business operations. One day or another, this lack of transparency and standard reporting metrics may well lead to some surprises.