Enough With The Freakin' ARPU

A recent study has found that global mobile phone ARPU has fallen 13% in the past year. ARPU, or Average Revenue Per User, has been the yardstick by which Wall Street (or any other country’s equivalent street) has often judged telecom carriers. But it’s high time this changed. The senseless use of a revenue metric to define how well a carrier is performing has just partial bearing on how much profit the carrier is actually deriving from each user. For years, the silly overuse of ARPU kept US wireless carriers from tapping into the low end of the market with prepaid services, for fear that poorer customers would lower their average revenue. So instead, new entrants and MVNOs (Virgin, MetroPCS, Tracfone…) are making profits off these important underserved segments. Nextel even created the separate unit, Boost Mobile, to address youth, for fear they might pull down the $70 Nextel ARPU. Soo…So what if worldwide ARPU is down? Of course it is!! Existing and new carriers are finally focused on tapping into new markets in poorer nations, and into poorer customers in richer nations. The question is: can these carriers provide a valuable communication service to these people, while making a reasonable profit? If so, everybody wins, and bollocks to ARPU.

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