The recession won’t cut too deeply into wireless data spending in the U.S., according to data sent over last night by Chetan Sharma of Chetan Sharma Contulting. Sharma concludes that the rise in consumer smart phones mean that data spending by consumers will offset cuts in plans caused by increased job loss and data subscriptions paid for by the employer.

UPDATED: The recession won’t cut too deeply into wireless data spending in the U.S. for now, according to data sent over last night by Chetan Sharma of Chetan Sharma Consulting. In his third-quarter wireless data report, Sharma concludes that the rise in the number of consumer smartphones over the last few quarters means that data spending by consumers will likely offset cuts in revenue caused by the loss of jobs and employer-subsidized data subscriptions.

Data is continuing to offset the loss in voice ARPU (average revenue per user), and is still rising as a percentage of wireless revenue, to stand at more than 23 percent for U.S. carriers as of the end of the third quarter. A year ago, the percentage contribution stood at 17.7 percent. Sharma estimates that in the U.S., that number is likely to exceed the 25-percent mark in the final quarter of 2008. Verizon Sprint leads the pack, with data ARPU of $13.58 $13.50. T-Mobile, which is only now rolling out its 3G network, has a scant $9 in data ARPU from customers.

However, economic uncertainly and rising data penetration (more than 35 percent of the U.S. now has a data plan), means that there may be some pressure on pricing. Sharma also notes that after the holidays, if times don’t improve, the industry might see declines in data toward the end of the second quarter of 2009.

You’re subscribed! If you like, you can update your settings

  1. I am in Sprint’s corporate communications group, and I would certainly agree that data is going to be the growth area for wireless going forward. However, what this story doesn’t note is that Sprint actually is the current data leader — on our Sprint network we are the industry leader in data ARPU at $16.50 in the third quarter, up a dollar from 2nd quarter and $2 from first quarter. Our Nextel network has data usage but was not designed to be data centric and therefore our combined data ARPU figure is smaller, but still in 3Q only 8 cents less than the figure you cite for Verizon above. The key to our substantial data position and data revenue growth is that we alone are making data use simple and affordably priced — as with our “Simply Everything” plan that is much more affordable than the competition, and to offer personalized customer training on data use in our stores via our revolutionary “Ready Now” program, and to design our phones to make data applications easy to access and use, as in our “One Click” program. We know customers want data, and we believe the way to attract them is to work hard to make things easy for them. — James Fisher

  2. What James forgets to mention is that Sprint has the worst possible customer service. Customers are quitting them in droves. I’m a former customer. Their data plan is a rip off. Furthermore, Sprint has partnered with a collections firm called Cavalry which is well know for its nefarious practices. Just search for Cavalry and Sprint on Google.
    AT&T and T-mobile provide much superior plans with far better customer service. The number of complaints about Sprint online should be proof enough for James.

  3. Handset Market Decline May Soon Affect Carriers – GigaOM Monday, November 24, 2008

    [...] Wireless data plans are still enjoying a steady takeup rate as people purchase sub-$200 smartphones. But even though people may still buy those smartphones as Christmas gifts, my bet is that data subscriptions will also hit bumps if the economy continues to pummel consumers. I fired off a quick email to Chetan Sharma to find out how he thought the lowered handset forecast might affect carriers and their efforts to push data plans; he said we won’t know for sure until next year. “Now, we don’t know if these trends will counter each other to balance things out or will the replacement cycles slow down quicker to bring down the services market. Q3 data didn’t have any indication of that and I doubt if Q4 data will have any conclusive evidence of the trend. I think the first indication of things are shaping up will be in Q109 results as by then consumers and the markets will have a better understanding of the new economic policies.” [...]

  4. The iPhone and the Ensuing Wireless Broadband Boom – GigaOM Friday, November 28, 2008

    [...] percent in the third quarter to hit $8.8 billion in data services revenue. Despite the recession, many in the industry are of the opinion that wireless data sales aren’t going to fall, and in fact will stay strong for the [...]

  5. So Far, Wireless Data Looks Recession-proof Wednesday, January 28, 2009

    [...] growth in wireless data at the top carriers is still going strong, despite a recession. There are concerns that some of this is the result of holiday sales (all those new iPhones for Christmas), so we’ll keep an eye on next quarter’s numbers [...]

Comments have been disabled for this post