Mobile ARPU Declining Across Europe and USA: TRS

Mobile broadband service has become one of the most demanded and increasingly competitive services in the recent days. At the same time, mobile data traffic is also growing drastically and has reached over 25% of total ARPU for many operators. Some operators are actually considering data share of total ARPU at over 30%.

The Strategy Analytics Tariff and Revenue Strategies (TRS) Insight, examined the impact of these trends in six countries, France, Germany, Italy, Spain, UK and USA, identifying key factors that drive the decline in ARPU.

Between 2006 and 2010, for selected mobile operators, overall ARPU is going down because although data traffic is growing, voice ARPU is declining by 23% to 60%. Although total voice minutes have generally not declined, revenue per minute has dropped significantly due in part to lower mobile termination rates.

According to Sue Rudd, Director TRS, in the US, data ARPU has increased approximately 65%. By contrast data ARPU in Europe has increased only 10% to 43%. And new entrants in some markets – O2 Germany and Vodafone Spain – have actually stimulated lower data ARPU to gain market share. Despite the general increase, actual data prices per month are between one quarter and two thirds the value of voice service. As a result the rapid growth in data traffic has contributed significantly to the decline in total ARPU. The change from voice and messaging to data and Internet access has significantly diluted the monthly price per user. Marginal subscriber penetration and trading down during the recession have further accelerated the decline in overall ARPU.