Carriers Find Ways To Drive Customer ARPUs - InformationWeek

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10/28/2008
01:10 PM
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Carriers Find Ways To Drive Customer ARPUs

ABI Research identifies the five factors that can drive up carriers' revenue while facing a U.S. cell phone subscriber rate at nearly 80%.

With the U.S. cell phone subscriber rate at nearly 80%, it's becoming more difficult for wireless carriers to increase revenue by getting new customers. With voice rates declining as well, mobile operators need to look toward other avenues to increase the average revenue per user, or ARPU, according to a new report from ABI Research.

The report, entitled "U.S. Mobile Operator Business Customer Profiles," points to five factors that drive mobile business revenues for operators: occupation distribution, customer mobility, smartphone penetration, pricing, and device features adoption.

"Our survey analysis shows that operators have pursued different strategies which have affected their mobile business ARPUs," said principal analyst Dan Shey, in a statement. "Each has its benefits, and can deliver great near-term benefits. However, the data also shows the challenges raised by these decisions, particularly in a competitive environment."

Mobile operators have long sought the enterprise user because they typically purchase higher-end smartphones and subscribe to a data plan. But the research firm said the carriers are increasingly targeting the casual, or pro-sumer markets with smartphones like Apple's iPhone 3G, the T-Mobile-HTC-Google G1, and Research In Motion's upcoming BlackBerry Storm.

"Although business customers are a high ARPU customer segment, they are also very demanding. Ultimately operators need to have a portfolio of solutions which they can tailor and use individually or in partnerships to serve business customer needs," Shey said.

The report also points out that smartphone adoption alone is not a sure way to drive up ARPU. For instance, T-Mobile has spent more than $4 billion to acquire spectrum to roll out its 3G network.

The report said the fourth-largest U.S. carrier is good at getting smartphones like the BlackBerry into user's hands, but it's not making as much ARPU as competitors because it has the lowest data pricing of all the carriers.

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