Friday, December 16, 2005

Strategy Analytics: Voice Competition Puts Squeeze On US Wireless Market

Strategy Anlytics has issued a new report that finds "increasing signs of weakness in the US wireless voice market, with average revenues per user (ARPUs) for voice services dropping 8 percent year on year and data services failing to make up the gap."

Phil Kendall at Strategy Analytics said, "The last two quarters have seen US wireless voice metrics move to a new rate of decline. The decline in per-minute voice revenues continues, with rates slipping from 14-18 percent in 2003 to a new low of 22-24%. Voice ARPUs are declining even faster, falling from 3-5 percent in 2003 to 8 percent today. For a long time the US was a shining example in how to increase wireless subscribers while still growing average revenues and margins; that climate is now starting to change."

David Kerr at Strategy Analytics added, "Data just cannot make up this shortfall at present. While most other regions are seeing data ARPUs struggle to grow, the US is at least posting annual growth here in excess of 50 percent. But even this growth rate is down significantly from recent quarters. The carriers will need to work hard to reverse these trends and avoid falling into the same trap as Western Europe where margins have faltered over the last 18 months."

The question that is left unanswered is whether the move to 3G networks and services will be able to drive data usage and most importantly ARPU for the network operators...