More Proof that the Internet Will Save Wireless Carriers

17 Comments

A report out from Chetan Sharma Consulting proves that data is the big story when it comes to wireless operators in the United States. Driven by flat-rate plans, increasing 3G coverage and the iPhone, data spending reached $8.2 billion for the second quarter of 2008, or about 21 percent of the total wireless services revenue. The boost in wireless services increased average revenue per user by 5 percent to 50 cents, offsetting a 5-cent decline in voice ARPU.

Verizon, which leads U.S. wireless operators with its 60 percent 3G subscriber penetration, saw the most growth in 3G usage and the most data revenue — $2.6 billion for the quarter. However, AT&T, the exclusive provider to the Internet-friendly iPhone, had only 25 percent 3G subscriber penetration but also saw its data sales come close to Verizon’s at $2.5 billion, proving that the Internet on the phone is a powerful driver of data revenue.

In the big picture of wireless revenue, carriers grew sales by 8.6 percent for the second quarter compared to the same period in 2007. In the second quarter of 2008 data revenue saw 40 percent growth. The numbers show we’re moving toward ubiquitous broadband in the United States but that we still have a ways to go. The average 30 percent 3G subscriber penetration rate could be improved, but perhaps cheaper 3G plans and Internet-friendly phones will pump up both subscribers and data revenue.

image from Chetan Sharma Consulting

17 Comments

Stacey Higginbotham

@John Z, the report says, “Non-messaging continues to grab 50-60% of the data revenues for the US carriers,” but messaging may be more than just SMS texts. That should help somewhat though.

John Z

Moble broadband is on a tear, but most carriers still include their text messaging (SMS) in their data revenue, skewing the results and growth rates dramatically. Text messaging is far more profitable and less susceptible to competitive market pressures than either voice or data plans.

It would be helpful to see a more complete analysis of data revenue by type of traffic and handset.

AC

Going to forward this to the CEOs of all Canadian Wireless Carriers right now… Thanks!

Andreas

The cost of delivering mobile data is much higher. But the price of mobile data is seldom based on cost. Five years ago the standard price for mobile data was 20 USD per megabyte in Sweden. Now the price is 20 USD per month. Thats a price drop of about 99.999%.

Paul

How does the cost of delivering mobile data compare to that of delivering broadband data over DSL or cable? Unless it is much higher, expect a collapse of mobile data revenues, or some attention from the FTC, since I pay for mobile data about what I pay for DSL, and for a fraction of the DSL traffic.

Andreas

The growth for mobile broadband has been explosive in Sweden. At the end of this year there will be 1 million mobile broadband subscriptions (ITresearch). And there are only 9 million of us in total.

Sure, some people use the mobile broadband instead of ADSL. But most people just add it for mobile use or for the country house or boat.

And of top of that people are surfing on their phones.

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