Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
With AT&T (s t) announcing its free mobile to mobile calls to help fend off customers defecting for the iPhone (s aapl) on Verizon’s (s vz) network, it’s time to recognize that voice is now worthless. We can joke that AT&T clearly thought that all along (hello, dropped calls) but the pricing here signals that operators are ready to put all their eggs in the data basket. Sure, there are strings attached (customers need to have an unlimited texting plan and already subscribe to a plan of 450 minutes or higher) but allowing customers to call any mobile numbers in the U.S. without using allotted minutes turns a 450 minute plan for $40 and the corresponding $20 texting plan (for individuals) into an unlimited voice plan.
This isn’t just a means to keep iPhone subscribers, however. It’s another depreciation for the value of voice calls as carriers accept the decline of revenue coming from voice. But before we get all happy about cheaper mobile bills, don’t think operators are going to leave data revenue lying around. For example, when AT&T introduced its new $15 for 200MB plan and 2GB plan for smartphones in June, its rhetoric about the plans being cheaper for subscribers didn’t fall on deaf ears. The operator has seen an uptick in its mobile subscribers since implementing the price change in June, although it’s cagey about details on how many of those that have signed up for the low-end plan that are new subscribers.
However, many of those who added data plans may find that the entry-level plan is more like a gateway drug that will draw them inexorably to gigabyte plans and perhaps even overage charges. Because voice is still profitable and represents a sizable chunk of operators’ revenue (see the chart from Chetan Sharma’s most recent mobile operator report), operators won’t let it go without trying to recoup some of that average revenue per user (ARPU) with higher data charges for consumers. They’ll also turn to machine-to-machine subscriptions to make up profits and provide high-volume, lower-revenue subscriptions. I explained a lot of this last May, but today’s news is yet another data point showcasing the continuing decline of voice.
Sure it’s good for those who use their phones for talking over cell networks, but thanks to VoIP, video chat, and increasing web use, that source of income is overrated. Carriers know it, which is why AT&T threw subscribers a bone as it seeks to hold onto iPhone subscribers and its real source of income: iPhone data hogs.
Related content from GigaOM Pro (sub req’d):
- The Internet of Things: What It Is, Why It Matters
- Research Report: Location — The Epicenter of Mobile Innovation
- Is Geolocation a Real Business or Just a Feature?