Blog Post

How the Recession Will Affect Wireless Data Spending

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.

5 Responses to “How the Recession Will Affect Wireless Data Spending”

  1. Randy Holtz

    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.

  2. 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