Less Churn = Cheaper High-end Handsets

It's earnings season and Dow Jones reports that U.S. network operators are doing a better job in reducing customer churn. Agressive promotions and ubiquitous family plans are being attributed to carriers showing more growth and less turnover.

Financial analyst William Power at Robert W. Baird & Co. said "As those members become more reliant on their wireless phones, it would require agreement of everyone for them to switch. It's a strong driver for each of the carriers."

On the M:Metrics blog, Seamus McAteer does a great job breaking down the impact less churn has on Verizon's bottom line. Subscriber churn at Verizon dropped to 1.2% and McAteer calculates that this rate "corresponds with a customer lifetime of about 79 months or revenue of about $3,920 over the lifetime of a typical subscription given the carrier's current ARPU. Each drop in churn of 0.1 percent yields an incremental expected subscriber lifetime of 5 months."

More importantly, McAteer says lower churn and the corresponding higher lifetime customer value will enable carriers to invest more in customer acquistion, resulting in "speedier proliferation of higher-end handsets to support services such as streaming video and music distribution."

Good stuff to know. Hey Verizon, can you hear me now? I'm a long-time, high-ARPU Cingular customer looking for a high-speed, wi-fi enabled smartphone. What kind of deal are you willing to swing...

via Cellular News
M:Metrics Blog