Data Services Driving Up American ARPU

Overall spending for wireless service has increased significantly from 2004 as customers continue to try new non-voice service offerings such as text messaging and games/music file downloads, according to a new J.D. Power and Associates Study. During the past three-year period, the average monthly wireless bill has increased a full US$11 -- from US$55 in 2004 to US$66 in 2006. The increase in monthly spending comes mainly from a rise in overall wireless usage, new reported product/service uptake in data and text messaging, added FCC regulation for 911 calls and WNP (Wireless Number Portability) fees, and new state/local service taxes.

The trend in higher monthly spending will likely continue, as the level of usage for non-voice products has risen substantially from the same reporting period in 2005. For example, the percentage of wireless customers using text messaging on a regular basis has risen from 19 percent in 2005 to 25 percent in 2006 -- a 32 percent increase.

"It will be important for wireless carriers to continue to roll out new services and products to increase customer revenue as industry penetration slows and customer retention becomes more critical," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "However, customer expectations will continue to rise, as cell phone users increasingly rely on the communication functions of their cell phones beyond voice calling."

The study finds that customer satisfaction can impact the actual usage levels of new product offerings and services, particularly for services that charge a fee. For example, the level of regular usage for sending/receiving text messaging among those with above-average satisfaction is 27 percent. This compares to only 21 percent among those who are dissatisfied with their overall wireless service.

"It's clear that customer satisfaction has a direct correlation with an increase in new product usage and therefore plays a critical role in future revenue potential for the wireless carriers," said Parsons.

The study measures customer satisfaction based on 42 specific service-related measures grouped into six key factors that impact overall wireless carrier performance. They are (in order of importance): call performance and reliability (26%); customer service (17%); service plan options (17%); brand image (14%); cost of service (14%); and billing (12%). Carriers are ranked across six regions in the United States: Northeast, Mid-Atlantic, Southeast, North Central, Southwest and West.

T-Mobile ranks highest in all six regions (including four ties), performing particularly well in customer care, cost of service and billing.

Verizon Wireless ranks highest in ties in four regions: Northeast, Mid-Atlantic, Southeast and North Central. Verizon Wireless' main strengths are in the areas of call quality and brand image.

Study results by region are:

Northeast Region: T-Mobile and Verizon Wireless rank highest. T-Mobile performs particularly well in the areas of service plan options, cost of service and billing. Verizon Wireless receives strong ratings in call quality.

Carriers evaluated in the Northeast include: Cingular, Sprint Nextel, T-Mobile and Verizon Wireless. The Northeast Region includes: Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Mid-Atlantic Region: Verizon Wireless and T-Mobile rank highest. Verizon Wireless receives the highest ratings from customers in call quality and customer care. T-Mobile performs particularly well in the cost of service and billing factors.

Carriers evaluated in the Mid-Atlantic include: Cingular, Sprint Nextel, T-Mobile and Verizon Wireless. The Mid-Atlantic Region includes: Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia and West Virginia.

Southeast Region: T-Mobile and Verizon Wireless rank highest. T-Mobile performs well in cost of service and billing. Verizon Wireless performs well in the area of call quality and customer care.

Carriers evaluated in the Southeast include: Alltel, Cingular, Sprint Nextel, T-Mobile and Verizon Wireless. The Southeast Region includes: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.

North Central Region: T-Mobile and Verizon Wireless rank highest in customer satisfaction in the most competitive region in the study. T-Mobile receives the highest ratings from customers in cost of service, service plan options and billing, while Verizon Wireless performs particularly well in call quality.

Carriers evaluated in the North Central Region include: Alltel, Cingular, Sprint Nextel, T-Mobile, U.S. Cellular and Verizon Wireless. The North Central Region includes: Illinois, Indiana, Michigan, Ohio and Wisconsin.

Southwest Region: T-Mobile ranks highest with strong ratings in customer service, service plan options, cost of service and billing.

Carriers evaluated in the Southwest include: Alltel, Cingular, Sprint Nextel, T-Mobile and Verizon Wireless. The Southwest Region includes: Arkansas, Kansas, Missouri, Oklahoma and Texas.

West Region: T-Mobile ranks highest, performing particularly well in service plan options and cost of service.

Carriers evaluated in the West include: Cingular, Qwest Wireless, Sprint Nextel, T-Mobile and Verizon Wireless. The West Region includes: Arizona, California, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, Utah, South Dakota, Washington and Wyoming."

Posted to the site on 5th October 2006