North America is one of the most mature mobile markets, with high rates of subscriber penetration and mobile broadband adoption. High levels of 4G and smartphone adoption are driving strong growth in data usage across the region. While competition is a challenge, driving down ARPU levels across the sector, operators have invested significant sums in both spectrum and network equipment. North America is now leading the next wave of mobile innovation and vying for leadership in the drive to develop 5G mobile technologies.

Industry overview

Unique subscriber penetration in North America at the end of 2015 stood at almost 80%, slightly below the developed market average of 84% and suggesting scope for only modest subscriber growth going forward. Smartphone adoption has now reached more than 75% of connections in North America, and will continue to expand albeit at a slower pace than recently. Operators are seeing huge growth in data usage, enabled by mobile broadband networks and widespread smartphone adoption.

Over the past several years, operators have invested significant sums in both spectrum and network equipment, allowing them to reach the high levels of 4G coverage today. Although revenues are expected to fall slightly in the US and grow only slowly in Canada, the reduction of handset subsidies and other cost-saving measures allow the operators to broadly remain profitable and, with capex subdued for the next several years, cash-generative.

Economic growth

In 2015 the mobile industry made a total contribution of $710 billion to North America in value added terms, equivalent to 3.6% of the region’s total GDP.In the period to 2020 this figure will increase to almost $1 trillion (4.5% of GDP), as the region experiences strong growth in productivity brought about by the fast adoption of machine-to-machine (M2M) technology and the increased digitisation of industry and services.

The mobile ecosystem also supported 2.3 million jobs in 2015. This includes workers directly employed by mobile operators and the ecosystem, and jobs that are indirectly supported in the rest of the economy by the activity generated by the sector. In addition, the industry makes an important contribution to the funding of the public sector, with $82 billion raised in 2015 in the form of general taxation and an additional $46 billion in government revenues from spectrum auctions.

The next wave of innovation

North America continues to drive innovation across the mobile ecosystem and help realise the potential of the Internet of Things (IoT). The region is home to many of the most innovative companies in the broader mobile ecosystem, while venture-capital flows in the US into IoT continue to show healthy growth.

The region played a leading role in the development of mobile commerce and social platforms, and similarly has been a driver of innovation in emerging technologies such as blockchain and the potential disruptive power of fintech. Artificial intelligence (AI) and its application in areas such as chatbots and smart personal assistants is increasingly the new focus area, and again the region is home to much of the innovation.