The recently completed round of third-quarter financial results from domestic operators showed a continuation of what was observed in the previous quarter and what has become a growing trend across the mobile space: wireless data services are the new driver for the market.
According to long-time telecommunications industry analyst Chetan Sharma mobile data service revenues increased 5% sequentially during the third quarter and 15% year-over-year to $22.8 billion. Sharma added that the market remained on track to hit $90 billion in total data service revenues for the full year.
That growth helped propel an increase in average revenue per user during the third quarter, which increased 82 cents sequentially, despite a 38 cent drop in average voice ARPU. Data services accounted for 48% of overall ARPU during the third quarter, with Sharma expecting the segment to exceed 50% by year end.
This reliance on data services to drive revenues was boosted last year when carriers began rolling out so-called shared data plans that allowed customers to sign up multiple devices to share a pool of data services. Along with these pooled data buckets, carriers also provided customers with unlimited voice and messaging, basically commoditizing those services. This was seen by AT&T, which added considerably more postpaid tablets (data-only devices) during the third quarter than smartphones.
Overall, Verizon Wireless and AT&T Mobility accounted for a vast majority of mobile data revenues during the third quarter, a result helped by the fact those two operators serve two-thirds of the nation’s wireless subscribers. Sharma found that the market’s two largest operators accounted for 71% of overall mobile data revenues for the quarter.
While Verizon Wireless and AT&T Mobility continue to dominate the mobile data space, they are finding a greater challenge in competing at the low end. AT&T executives noted they were seeing pressure on what it termed “price-sensitive” customer retention, something the carrier has tried to address through upgrades to its legacy GoPhone offering, the launch and expansion of its Aio Wireless service and its current attempt to acquire no-contract provider Leap Wireless.
RCR Wireless News spoke with Bill Ho from 556 Ventures about third-quarter results from Verizon Wireless and AT&T Mobility and the impact those numbers could have on pending results from smaller rivals.
Verizon Wireless for its part seems content to leave the low-end of the market to rivals as its executives have stated no desire to use the Verizon Wireless brand to aggressively target the no-contract space. The carrier has been able to tap into the market through partnerships, but continues to focus its name brand on the more lucrative segment of the market.
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