Friday, January 13, 2006

Competition in Voice Market Squeezes Wireless Carriers

TechNewsWorld writes about a new study by Strategy Analytics that finds "there are increasing signs of weakness in the U.S. wireless voice market, with the average revenue per user (ARPU) for voice services dropping 8 percent during the last year -- and data services failing to make up the gap."

Phil Kendall at Strategy Analytics said, "The last two quarters have seen U.S. wireless voice metrics move to a new rate of decline. The decline in per-minute voice revenues continues."

Kendall said that per-minute wireless rates plummeted "from 14 to 18 percent in 2003 to a new low of 22 to 24 percent." Voice revenues are declining even faster, "falling from three to five percent in 2003 to eight percent today."

With voice revenue falling, network operators have been betting on their data networks to drive revenue. David Kerr at Strategy Analytics said, "Data just cannot make up this shortfall at present. While most other regions are seeing data ARPUs struggle to grow, the U.S. is at least posting annual growth here in excess of 50 percent. But even this growth rate is down significantly from recent quarters."

The operators are launching myriad services (i.e. music, video, etc) and hoping something will stick. It'll be interesting to see if they can move beyond just being fast pipes for mobile internet access...