SMS services, ring tones and similar services are expected to generate annual revenues of 11 billion euros in Germany by 2007.

According to new research from Swiss-German research firm Soreon mobile data revenues will reach 3.7 billion euros this year.

While mobile voice turnover is stagnating, the mobile data market is taking off and will be boosted by new applications, such as MMS, e-mail, music files, chat services, adult and sports content, and location-based services.

German mobile network operators are expected to generate 33 percent of turnover from mobile data services by 2007, up from 17 percent. As it stands SMS accounts for the bulk of mobile data revenues.

"While SMS and ringtones have been around for years as Cash-Cows for network operators, rapid growth of GPRS-services (e-mail, MMS) and premium applications like chat, sports and adult content over the last twelve months gave an extra boost to the data revenue growth," says Soreon research director Steffen Binder.

However hurdles remain on the mobile data growth path, the most critical being the need for higher data transmission rates. Fast network connections are essential for the downloading of music, videos or e-mails on mobile handsets.

The introduction of UMTS and/or EDGE are critical to sustain mobile data growth through new, more data-intensive applications.

Pricing has been identified as another important issue, with 73% percent of German mobile customers stating that prices for mobile services are too high, a problem which must be rectified to secure future growth.