Monday, June 06, 2005

Wireless Carriers Beat the Bushes for ARPU

Mark Evans


If you're looking for insight into the desperation among Canadian wireless carriers for higher ARPU, an interesting development is the co-operation happening between the major carriers. The industry is close to inter-carrier agreements that will allow consumers to send pictures, video and other multi-media messages more easily. This is a logical development but I'm not sure it's going to jump-start picture and video messaging. Regardless of the numbers carriers like to tout, the market for picture and video messaging has its limit because of the relatively high cost involved. The carriers, however, like to think the wireless wallet is able to continue growing by simply adding more features and services. But at some point more consumers are going to be shocked at the size of their bills, and pull back on many purchases.
On another front, the carriers recently got together to create a common brand for wireless hot spots. The idea is if you make it easier for consumers to find hot spots, they will naturally spend money on mobile services. Again, this is nice in theory but it does not reflect the fact only a small segment of the wireless population is willing to pay for the convenience of on-the-go wireless service to surf the Web and access e-mail.
The common theme between these two developments is that Canada's wireless market is maturing and it is getting more difficult to attract high-value customers - a.k.a. low hanging fruit. Most of the people without wireless service are probably marginal customers who, if anything, will gravitate to an inexpensive pay-you-go service such as Virgin Mobile. These are not the kind of people who would spend heavily on Web access or e-mail, although they may download some ringtones and send some text-messages. This explains why carriers are so enthusiastic about getting their best customers to spend even more on services - a strategy that includes the sale of heavily subsidized devices such as Blackberries and Palms.

1 Comments:

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