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Unlimited tariffs hitting US operator service revenue

26 SEP 2017

Unlimited tariffs are boosting operator subscriber figures, but one metric they’re not helping is service revenue, a new report from Technology Business Research (TBR) revealed.

According to TBR, US operator wireless revenue rose just 0.6 per cent year-on-year in Q2 to $57.8 billion, spurred on by growth at T-Mobile US and higher equipment revenues from device instalment plans.

However, TBR pointed out service revenues fell among most mobile operators. The second calendar quarter marked Sprint’s 16th consecutive quarter of decline in service revenue (the period is Sprint’s fiscal Q1), while AT&T’s wireless service revenue dipped 2.5 per cent year-on-year and Verizon’s dropped 5.6 per cent.

Part of the problem, according to TBR, is the resurgence of unlimited plans among US operators slashed income from data overage fees.

“Verizon’s and AT&T’s new unlimited data plans, which launched in February, helped drive a year-to-year increase in the carriers’ post paid phone net additions due to enhanced customer flexibility and video streaming capability,” TBR analyst Steve Vachon commented.

“However, adoption of unlimited data plans had mixed results on service revenue. Although the plans benefit ARPU, as customers migrate from lower-priced data plans, they also hamper ARPU by reducing overage revenue,” he added.

Other impacts
TBR also noted unlimited plans are changing the types of promotional offers operators use to woo new subscribers. With “extra data” promotions now a moot point, TBR noted operators are turning to value added services, like T-Mobile’s addition of free Netflix and AT&T’s HBO offer, and buy-one-get-one free device deals to bring in new subscribers.

Heading into a period in which a $1,000 iPhone is the star of the show, TBR predicted subscriber additions in the third and fourth quarters will be “largely dependent on the success of iPhone promotions given the particularly high retail price of the new device models.”

However, analysts elsewhere are forecasting muted iPhone demand.

Author

Diana Goovaerts

Diana joins Mobile World Live as its new US Editor, reporting on infrastructure and spectrum rollouts, regulatory issues, and other carrier news from the US market. Diana comes to GSMA from her former role as Editor of Wireless Week and...

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