By Ed Finegold
From a wireless carrier’s perspective – among others - I am loser. I compare my relationship to my mobile phone to my friend Dan’s with chicken. Dan used to work for a commercial meat wholesaler. He visited chicken farms regularly. He hasn’t eaten a bite of chicken since. Similarly, having studied telecom billing for nearly 15 years, I won’t bite on value-added services. I’ve used an inexpensive pre-paid service for more than two years, since dropping one of the major carriers. And for this reason, I’m a loser. I’m not one of those beloved iPhone or Blackberry users with an increasing ARPU and a hunger for megabytes. I do have the opportunity to study usage and spending patterns across the industry, however, and it’s clear why these customers are so valuable for wireless carriers.
ARPU V.I.P.s
Thanks to Validas (www.myvalidas.com), a company that provides wireless bill analysis and plan right-sizing advice for businesses and consumers, I’ve been involved with several studies examining anywhere from 1,600-plus churners to 40,000-plus wireless users from all parts of the market. I’ve been crunching the numbers on one sample of 2,402 individual consumer wireless customers from Verizon Wireless, AT&T Wireless, Sprint, T-Mobile, and U.S. Cellular. Of these, 146 are Blackberry addicts – about 6 percent - and 174 are iPhone junkies – about 7 percent.
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I won’t bite on value-added services. |
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That’s about 57 percent of an iPhone user’s revenue contribution, and only about 47 percent of what a Blackberry user adds to the top line. That’s why wireless carriers should, at the least, treat Blackberry and iPhone users like casinos treat their high rollers. “You need a new battery for that device? Here’s one with my compliments…and a hand rolled cigar to boot.”
It’s Not Just About Data Usage
It seems like every analyst in the wireless sector is talking about how important data usage is to revenue growth. They aren’t wrong, but they’re not telling the whole story either. In this study’s sample, Blackberry users spent an average of $35.49 per month just for their megabyte usage. iPhone users,
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From a pure spending perspective, the 13 percent of these users that are iPhone junkies and Blackberry addicts accounted for about 23 percent of the total charges billed. In this sample, Blackberry users showed an ARPU of $109.99 while iPhone users delivered $90.71 per user. Todd Dunphy, president for Validas, explains that Blackberry plans are simply a little more expensive than the iPhone plans, which accounts for most of the difference in ARPU.
But here’s the kicker – the other 2,082 users who have neither Blackberrys nor iPhones showed an average ARPU of just $51.41.
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similarly, spent $26.63 per month for megabytes. Everyone else – us losers – spent an average of just $4.18 per month. So, without question, data-friendly devices drive ARPU.
That said, Blackberry and iPhone users also use more of everything. They make 302 and 309 calls per month consuming 497 and 473 paid peak minutes per month respectively. Everyone else makes just 222 calls consuming only 275 paid peak minutes per month. It looks like those Blackberry and iPhone users really are more popular.
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