Higher Spend in Operator Stores Means Higher Spend on Mobile Services

M:Metrics is reporting a direct correlation between the venue of handset purchase and subscribers' monthly spend on mobile services. The firm found that the majority -- 56 percent -- of users who bought their handset at an operator store pay more than $60 per month for mobile service. In contrast, consumers who spent less than $60 on monthly mobile services were more likely to have purchased their phones through indirect retailers such as Wal-Mart, Best Buy, Radio Shack or Circuit City.

According to John Jackson, vice president and senior analyst, M:Metrics, the latest numbers support the operators' continued investment in the direct channel as a value driver because of its inherently higher-touch environment than 'grab-'n'-go prepaid' or big box environments.

"The operator direct channel is a cost driver, but the return on that investment is evident here," said Jackson. "The indirect channel has yet to raise the bar in terms of aggregate voice and data ARPU."

However, Jackson says as prepaid and family plans will characterize much of the remaining addressable upside in the US market, indirect and online channels are key to addressing the demand of these consumers.

"The carriers are leaving data ARPU on the table as discount retailers like Wal-Mart dedicate more real estate to mobile products and consumers flock to the Internet to find the most inexpensive handsets and cheapest plans," said Jackson.

European operators are also expanding control of the retail channel. The latest high-profile move saw Vodafone drop Carphone Warehouse, one of the largest European phone retailers, from selling contract subscriptions in the UK.

"This is part of a larger move of the operators taking greater control of the retail channel with many acquisitions of independent retailers," commented Paul Goode, vice president and senior analyst, M:Metrics, from the firm's European headquarters in London. "Our data supports this strategy, especially with the need for greater consultative and informed selling to drive consumer awareness and usage of mobile data services."

Retail Channel by Subscribers who Spent $60 or More Per Month on Mobile Services

Source: M:Metrics, Inc., Copyright (c) 2006. Survey of U.S. mobile subscribers. Data based on three-month moving average for period ending 30 September, 2006, n= 36,163

Retail Channel by Subscribers who Spent Less Than $60 Per Month on Mobile Services

M:Metrics data shows that those who spend less on mobile services in a month are less inclined to use mobile content and applications, and for the most part, purchase low-end phones with minimal data capabilities.

"The operator retail experience provides a vital opportunity for consumer education that hasn't yet been replicated on the Internet, or high-volume kiosk," said Jackson. "This is a conundrum, as indirect and online channels are key to sustaining subscriber growth. CRM initiatives must extend to these outlets and over the air post-activation. The operators need to offer consumers more than cheap handsets and cheap voice -- instead, the reach of customer service has to complement the value of price and convenience."

French Mobile Subscriber Monthly Consumption of Content and Applications

German Mobile Subscriber Monthly Consumption of Content and Applications

Spanish Mobile Subscriber Monthly Consumption of Content and Applications

U.K. Mobile Subscriber Monthly Consumption of Content and Applications

U.S. Mobile Subscriber Monthly Consumption of Content and Applications

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Posted to the site on 21st November 2006