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How High Can Data Revenues Go?

  • Posted: Friday, August 01, 2008
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  • Author: pradhana
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  • Filed under: Miscellaneous

By Sue Marek

Wireless operators insist that we are still in the early stages of wireless data adoption but during the past week the two top Tier 1 U.S. operators have both reported second quarter data revenues that account for nearly 25 percent of their average revenue per user. Verizon Wireless is the data leader, with 24.4 percent of its $51.53 ARPU coming from data. AT&T is a close second with 22.9 percent of its ARPU coming from data.

During the earnings calls with analysts, both operators talked about the continued growth potential for data but I'm wondering how high the data revenues can really climb. Verizon's data revenue grew 45 percent year over year. AT&T's data revenue grew 52 percent year over year. Is this strong growth rate sustainable?

AT&T executives predict there are still much more growth to come as consumers upgrade to integrated devices and smart phones that can take advantage of the 3G network. The company says about 18 percent of its postpaid customer base has upgraded to an integrated device. Meanwhile, Verizon says 60 percent, or 40.5 million, of its retail customers have upgraded to 3G data-capable devices.

Technology Business Research analyst Kate Price says the firm believes Verizon is the clear leader in monetizing data and that it will continue to lead the industry in data ARPU as it increases the number of data applications and data-centric devices.

I think the key to sustaining this growth rate lies not in the number of data-capable devices in consumer hands but in the availability of compelling data applications at reasonable price points. Without the continued push for better, more user friendly applications, data revenues are not going to be able to sustain this current growth trajectory. [FierceMobileContent]

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