Advances in Broadband Networks will Cause Carriers to Shift Focus from Voice to Data Revenues

Frost: In 2005, the four main wireless carriers in the U.S.: Cingular, Verizon Wireless, Sprint Nextel, and T-Mobile shifted their focus toward massive data network usage. As recently as the third quarter of 2004, there were six major U.S. wireless carriers, however, Cingular acquired AT&T Wireless and Sprint acquired Nextel, and both Cingular and Sprint are consolidating their networks, resources, and systems to reduce their operational expenditure (OPEX).

The voice average revenue per user (ARPU) will continue to decrease while data ARPU will grow substantially G Kibel. In the future, high speed wireless networks will be faster than ever, providing an opportunity for carriers to offer new services.

Advancements in network technologies and platforms as well as the associated development of sophisticated applications expect to stimulate demand for premium content and services. With a wide variety of new applications set to leverage improving technologies, the essential ingredients for compelling premium services are in place. Currently, the industry leaders are building strong customer bases to support well-conceived platforms for more sophisticated service concepts, including polyphonic ringtones, mobile music, games, graphics and information services.

However, the price per kilobit is still high for the average customers and handsets need to undergo further development. Once handsets integrate additional functionalities at reasonable prices, mobile data services will attract customers’ attention. Also, timing is critical, as the users' first impression of services will have lasting effects.

An application that is released too soon or before the technology can adequately support it may never be able to recover from an initial negative experience from customers, explains Kibel. On the other hand, a company that releases an application too late is likely to miss first-mover advantages and lose out on valuable market share.

Although data ARPU is rising, it is still voice ARPU that constitutes more than 90 percent of the revenues for the U.S. wireless carriers. In order to capture the attention of the users and attract them to generate more revenues in data ARPU, mobile handsets need to advance further. New handsets with better and enhanced displays will provide the best digital experience to customers. This in turn is likely to increase revenues drastically

A Competitive Analysis of Tier 1 US Wireless Carriers Publ 20060627