After a decade of extreme growth, the mobile market slowed to a crawl last year, according to new industry figures.
The total number of connected devices rose just 1% to 400.2 million, the slowest rate of increase on record, while wireless service revenue slipped 5% to $179 billion, the second year in a row of decline, the industry trade group CTIA reported in its annual survey on Tuesday.
With 326 million people living in the United States, that is an average of more than 1.2 devices for every man, woman, and child in the country. Wall Street is growing concerned about the maturing outlook for the industry–leading carrier Verizon (vz) has seen its stock unchanged this year, trailing the 4% gain in the S&P 500 Index, while second-ranked AT&T’s (t) shares have slid 13%.
Still, the industry is looking ahead to the next wave of even faster wireless transmission technology, known as 5G. Even while the number of new devices has leveled off, data usage has continued to surge and wireless carriers are building out 5G networks that will increasingly come into play over the next three to five years, possibly bringing in additional revenue from new services like always-connected smart devices. The industry is pressing to have federal rulemakers free up more airwaves and ease the way for the addition of thousands of smaller cell sites needed for 5G by preempting local and state regulations.
“This year’s report shows that wireless is on the cusp of a transformation to tomorrow’s 5G networks and the Internet of Things,” Meredith Attwell Baker, president and CEO of CTIA, said in a statement. Making the industry’s key lobbying point, Baker went on to say that the surge in data usage is “underscoring the need for continued efforts to modernize infrastructure rules and create a spectrum pipeline that ensures continued U.S. wireless leadership in the global race to 5G.”
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At the end of 2017, mobile carriers had deployed 323,448 cell sites, just a 7% increase from five years ago, CTIA said. But because 5G signals frequently don’t travel as far as transmissions in today’s 3G and 4G LTE networks, the industry may need as many as 800,000 sites to roll out 5G. Most will be much smaller than today’s cell towers, with radios strapped to tops of lamp poles and traffic lights, but some localities are pushing back concerned about ugly equipment installations and possible health hazards.
Wireless data traffic totaled nearly 16 trillion MB of information, quadruple the level three years earlier and 40 times what customers used in 2010, CTIA said.
The decline in revenue and rise in data usage could be part of the reason why T-Mobile (tmus) and Sprint (s), the third and fourth-largest mobile carriers, are seeking to merge. Lower service revenue at Sprint, though not at T-Mobile, means less money to expand for 5G to meet the growing data demand.
Meanwhile voice and texting activity industry-wide has also declined. Customers talked on their phones for 2.2 trillion minutes, slightly less than in 2010, and sent 1.8 trillion text messages, down from 2.1 trillion in 2010.