Faced with a falling Average Revenue Per User (ARPU) for their voice services, mobile-communications providers are offering premium multimedia content in order to compensate for their reduced voice revenue per subscriber, according to the market-research firm iSuppli Corp.

Voice ARPU fell by an average of five percent for the 13 key global wireless carriers profiled by iSuppli's Mobile Multimedia service. These carriers collectively represent more than 1 billion subscribers worldwide.

Further voice ARPU declines will occur in 2007 and beyond, iSuppli predicts. Because of this, these carriers are turning to music, video, gaming, and other data services to offset their losses.

"As more wireless-communications providers embrace the premium mobile-content opportunity, they are being transformed from pure communications providers to become something more: content distributors," says Mark Kirstein, vice president of multimedia content and services at iSuppli.

The wireless operators' transformation is boosting the mobile premium multimedia content market, which consists of audio, video, and games delivered via the carriers' wireless networks to paying subscribers. Global premium mobile content market revenue rose to $16.4 billion in 2006, up 22 percent from $13.4 billion in 2005, according to iSuppli.

Within the mobile premium-content market, music was the dominant category in 2006, while mobile video achieved rapid growth, although from a small base. The mobile games market grew quickly in North America, but lagged in Europe and Asia.

Music—including ringtones, ringtunes, full-track downloads, streaming, and ringback tones—continues to be the largest premium content category for mobile phones. Both mobile operators and content providers are cashing in on this phenomenon as revenue associated with mobile music nearly doubled on an annual basis in 2006. Music recording labels are benefiting from this boom as well, as the major firms in this market generated nearly $1 billion in revenue in 2006, with Universal Music Group capturing the largest share.

iSuppli estimates that by 2011, global mobile music revenue will reach $17.6 billion.