Page 41 - Mobile World Daily - Day One

Joss Gillet, ARPU | ANALYSIS
Senior Manager,
GSMA Intelligence Matthew Iji,
www.gsmaintelligence.com Forecasting Analyst,
GSMA Intelligence

Evaluating consumer
spending: the need for
a revised ARPU metric

Over the past decade, mobile that allow customers to consume their Figure 1: ARPU vs ARPS, USA Source: GSMA Intelligence
operators have introduced an ever monthly voice and data allowances across
growing choice of services and multiple devices have been exacerbating the new indicator such as average revenue per revenue generated by each product line
offerings to consumers as technology impact that the multi-SIM ownership unique subscriber (ARPS) would help to more (internet, fixed-line, TV and mobile) and
continues to rapidly revolutionise phenomenon has on the relevance of existing accurately evaluate mobile markets’ revenue reporting ARPU results representative of all
consumption habits. But many of the indicators such as ARPU. potential, price competition or mobile mobile consumption.
metrics used to measure success – operators’ performance.
such as ARPU — have yet to adapt to These tariffs originated from ‘digital For instance, in Spain, Movistar
this rapidly changing environment. pioneer’ markets in Asia (e.g. South Korea, In the US, Verizon Wireless introduced a (Telefónica) measures the average monthly
Singapore, Hong Kong) and the US, and are new metric that counters the effect of revenue generated by its Fusión customers
Despite the acronym, ARPU is not slowly spreading to Europe and mature multiple SIM ownership. For its contract which reached 3.4 million in Q2 2014, from
representative of a user’s (i.e. an markets across most regions. For instance, in segment, the operator calculates the average 2.2 million a year earlier. Fusión is a
individual) average spending on the US, Verizon Wireless’ ‘More Everything’ revenue per account (ARPA) by dividing convergence tariff that combines multi-play
mobile services since it is calculated based on plan and AT&T Mobility’s ‘Mobile Share contract revenue by the number of accounts services (mobile, fixed, internet, TV) under a
connections (i.e. SIM cards), by dividing Value’ plan allow customers to use unlimited per month during the period. An account single bill, with the possibility to include
mobile revenue by the average number of voice and text and shared data across up to represents one or more connections/devices additional mobile phone lines to the package
SIM connections during the period. ten devices. that share a single subscription. for a flat fee.
THINKING AHEAD: FROM MULTI-SIM
This calculation is only valid in an To illustrate this phenomenon, take a TO CONVERGENCE All of the aforementioned changes to
environment where one SIM connection fictitious mobile operator that has one The proliferation of bundled services is also ARPU definitions and calculations are key
equals to one unique subscriber, as it was the subscriber with a primary connection costing negatively impacting the relevance of considerations that require great attention
case more than a decade ago when mobile $60 per month, the operator’s ARPU is $60. traditional ARPU calculations, making it more from mobile operators to ensure that their
networks were in their infancy. However, However, when the subscriber goes on to add challenging for mobile operators to identify business performances are accurately
consumers actively use on average almost a secondary connection costing $20 per evaluated in the context of their current
two SIM cards each globally which month, the operator’s ARPU actually reduces business and forward-looking market trends.
significantly distorts the calculation. by 33 per cent ($80 across two connections =
$40).
This phenomenon of multiple SIM per
subscriber is taking place across both ARPS = AVERAGE REVENUE PER
developed and developing regions, albeit UNIQUE SUBSCRIBER
being more prevalent in the latter as cost-
conscious consumers tend to accumulate In essence, the constant ARPU declines that
prepaid SIM cards to take advantage of the have been taking place around the globe over
latest deals and promotions. the past decade are reflecting trends at a SIM
connection level rather than reflecting ‘real’
Meanwhile, the ability of shared data plans average consumer spending. Therefore, a

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