Don't Neglect Voice Revenues - Report

Mobile operators in Japan and South Korea have consistently led the world in the development of innovative mobile handsets, services, content and pricing. They generate significant non-voice revenues beyond text messaging and they are the only markets to have achieved mainstream adoption of 3G services, with over 40% penetration. However, in the race to offer new services and technologies they have sometimes failed to anticipate the full commercial implications of their actions, and innovation has not always translated into strong revenue growth. Mobile operators elsewhere can learn many lessons from their experiences.

While Japan and South Korea demonstrate revenue opportunities in a variety of new multimedia and advanced mobile services, a new report from Sound Partners Research also provides a reminder that mobile operators must not neglect to maintain and drive voice usage and ARPU.

Japan and South Korea have experienced quite different trends in voice telephony in recent years, as illustrated by the chart below. While South Korean operators have managed to maintain or increase voice usage and ARPU, their Japanese counterparts have seen mobile voice usage and ARPU falling. For example, voice ARPU for NTT DoCoMo fell from US$56 per month at June 2003 to US$46 per month at December 2005.

A closer look at the activities within South Korea reveals that the mobile operators have used a range of innovative tariffs and promotions, supported by strong marketing, to increase voice usage. Examples include monthly bundles of voice minutes (including an option of unlimited usage for a fixed fee), cheap calls among family members and a variety of incentives for increasing the number or length of calls by offering free or cheap minutes.

Meanwhile, Japanese operators have been more focused on developing their data services than maintaining and driving the voice business. Furthermore, the relative pricing of voice telephony and messaging is very high in Japan, which leads to customers choosing to send text messages rather than making voice calls. For example, whereas a one-minute voice call in the UK would typically cost the same as one or two SMS messages, a Japanese customer could send over 2500 mobile text emails for the price of a one-minute voice call."

Posted to the site on 19th May 2006