Approximately 76% of British adults own a mobile phone, according to Mintel's exclusive consumer research throughout this report. While it is far from the case that the bubble has burst for this industry, it would be accurate to state that penetration of mobile phones is nearing saturation point, based on the slowdown in the number of new subscribers and the fall in handset sales between 2000 and 2002.

The popularity of text messaging has shown that consumers can find additional services very appealing, and the move towards 2.5G phones - which include picture messaging among their features - and third generation (3G) phones indicates that the industry believes this is the way forward. The considerable investment in the new technology, which enables consumers to undertake a range of multimedia tasks from sending video clips to accessing the Internet and email accounts, should make upgrading an enticing prospect for many business and leisure users. Certainly the high cost of acquiring the 3G licences will ensure that providers take a proactive stance in recouping their investment. Consequently, this report examines the hypothesis that: "for the mobile phone industry to thrive now that consumer usage is nearing saturation point, it must encourage existing consumers to purchase new generation handsets and make regular use of the numerous add-on services. If it does not, the outcome will be a high degree of convergence among network providers, manufacturers and retailers."

Mintel’s latest insight into this intriguing market, provides exactly the information needed to identify and act on breaking trends. Easily implemented and comprehensive in scope, our research answers such crucial questions as:

How has the introduction of 3G technology influenced total mobile ad spend by both retailers and manufacturers?

Will (or has) the slowdown in handset sales experienced in recent years be reversed by the current drive to sell 2.5G phones and the recent launch of 3G phones?

How do current levels of consumer confidence and projected household income indicate the level of willingness consumers are likely to show towards adopting and paying for new functionality?

Can operators continue wooing new customers with pay as you go packages?

Other Mintel reports of relevance to this market include:

- PDAs and Electronic Organisers, Market Intelligence - UK Report, November 2002

- Telecommunications Retailing, Retail Intelligence - UK Report, July 2002

- Telephone and Answering Machines, Market Intelligence - UK Report, March 2001.