ARCchart: How can operators stomach churn?

ARCchart writes a lengthy piece that states due to "the costly launch of mobile data services, and the resulting pressure on operators to demonstrate decent revenues from this business, churn has taken a backseat in favour of the infamous ARPU as the performance metric (KPI) of choice. But churn has not disappeared, and the levels at which subscribers in developed mobile markets are switching between competing operators remains high – disturbingly high in some cases."

The article looks at the strong correlation between subscriber churn and subscriber acquisition cost (SAC). ARCchart argues that network operators instead of trying to "increase revenue from existing services or introduce new services to add supplemental revenue streams (thereby increasing ARPU)" should "introduce compelling services which lock customers to the operator, thereby discouraging them from churning to a competing network."

The article then profiles the efforts of NTT DoCoMo which has introduced the FeliCa platform into a range of its handsets. "FeliCa is a RFID-based proximity platform similar to NFC which turns the mobile phone into a transactional tool when the handset is swiped past a FeliCa reader. FeliCa can act as host to a range of ticketing and payment applications – Japan Airlines has an application for issuing ticketless boarding passes and Japan Rail has recently launched a FeliCa version of it Suica mass transit ticketing system. However, the most used FeliCa applications are payment related, the most popular of which is the EDY payment system."

The article concludes that "With a 60% market share in Japan, DoCoMo has the most to lose from any acceleration in subscriber churn, and services like FeliCa will dissuade subscribers from defecting. Western operators should take note. Such ventures will not necessarily boost revenue or ARPU, but they will help stem churn and reduce subscriber acquisition costs, thereby protecting income levels and profitability."