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North American mobile phone market approaches saturation, warns Forrester

The North American mobile phone market is fast approaching saturation, particularly within the Generation Y consumer group.

A new report from Forrester Research claims that mobile phone penetration is at 91 percent of Generation Y homes, much higher than the 80 percent for all households across North America.

"Gen Y consumers are not only the most likely to have a mobile phone, they are also the most likely to use their phone for services other than voice -- music to the ears of mobile operators that seek to increase the portion of their revenues that comes from data services," said Forrester analyst Charles S. Golvin in his report with Michelle de Lussanet, Remy Fiorentino and Dan Wilkos.

The average North American household currently has 1.7 mobile phones, the report said. Among households with at least one phone, the mean number is 2.1, mainly due to the availability of cheap family plans.

Such low-cost shared plans also mean that there are 2.4 phones, on average, in younger boomer households with a phone. But homes led by Generation Xers are those least likely to make do with only one phone, the report said.

High-end phone owners are the heaviest mobile Internet users, according to Forrester.

Apple iPhone users are not only the most likely to use the Internet on their phone, but they are the most frequent users as well.

Users of handsets from Palm and Research In Motion Inc.'s BlackBerry are also as likely as iPhone customers to browse on their phones.

While the iPhone, Palm and BlackBerry account for only a 4 percent slice of the overall mobile phone market in North America, they represent four times as large a share of mobile Internet users, Mr. Golvin said in his report.

The report is based on responses to a mail survey fielded in February and March of 61,033 U.S. and Canadian households and consumers ages 18 and older.

Meanwhile, consolidation continues apace among wireless carriers.

"Whether in the U.S. or Canada, the largest operators dominate the market," Mr. Golvin said.

Rogers, Bell Mobility and TELUS account for at least 83 percent of all Canadian mobile subscribers.

Nationwide, Verizon Wireless, AT&T, Sprint and T-Mobile account for at least 78 percent of all U.S. subscribers. That number will inch up 5 percentage points if Verizon Wireless' plans to buy smaller carrier Alltel Wireless gets regulatory approval.

Analyzing the evidence, Forrester found that mobile phones are no longer just about voice.

Half of all North American subscribers now use text messaging and more than a third use picture messaging. More than one in six goes online on their phone.

Again, Generation Y is leading the evolution in mobile usage behavior.

While only 5 percent of all mobile phone users download or stream music to their phone each month, that number is 12 percent for Generation Y subscribers.

"Gen Yers are not only more likely to use data applications on their phone than the overall population, they're more likely to do so with greater frequency," Mr. Golvin said in his report.