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US Mobile Operators Can Minimize Impact of Market Saturation

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Research firm, Analysys believes 2008 will mark the end of rapid mobile subscriber growth in the US and the beginning of a long decline. Speaking ahead of the Mobile World Congress, Head of Analysys Research in the US, Jason Kowal, says the total annual subscriber growth in the US could fall as low as 2% per year by 2012 less than that experienced by AT&T, Verizon and T Mobile in the last three months.

"Taken individually, the latest quarterly results for three of the top US mobile operators look strong: AT&T, Verizon and T-Mobile all saw Q4 subscriber growth of between 3% and 4%, and annual growth figures of between 11% and 14%. Add in Sprint's two consecutive quarters of net subscriber losses, though, and the picture looks substantially different. Total annual subscriber growth for the top four operators dropped to 9% for 2007 - the slowest growth rate this decade," says Kowal. "There is little doubt that Sprint is directly to blame for its own losses, but there is also something bigger going on here: a shortage of new subscribers."

Kowal states that the US mobile market is finally beginning to reach the level of market penetration (85% in 2007) experienced in Europe years ago.

In the UK, for example, subscriber growth slowed from 16% in 2001 to 9% in 2002 (the year when penetration rates reached 85%), and has only exceeded 10% in one year since then (2004). In 2006, UK subscriber growth was just 4%. Meanwhile, the Average Revenue Per User (ARPU) fell by 24% between 2000 and 2001, but has recently shown a slight recovery due to the contribution of data services.

Analysys says that there are several actions that US wireless carriers can take to improve their growth prospects, including:

  • maximizing revenue from prepaid customers, while minimizing the costs of addressing this market
  • for carriers with a well-established base of high-ARPU contract customers, protecting revenue from those customers by differentiating clearly between their contract and prepaid offerings, and even using a separate brand for prepaid
  • using data mining to develop a more proactive and targeted approach to customer retention incentives for contract customers
  • exploring the potential for future revenue streams from femtocells
  • improving the accessibility of non-voice services (particularly mobile media and entertainment services) by presenting content pricing clearly to customers
  • recognizing and withdrawing from elements of the value chain that are better served by specialists.

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Tags: sprint