On 25 October 2011, Bloomberg reported that the 3rd quarter profits of Dutch telco incumbent KPN “fell 9.4 percent because of price reductions and increasing use of mobile and social-media applications cut into voice revenue.” KPN announced that it will be increasing the prices it charges customers for mobile data use because more people are using KPN’s network not for voice, but for web browsing, social media and applications. It’s unclear whether KPN can make up the loss in voice revenues via higher billing rates for data.
Recently, Fortune reported that “in the past year the average AT&T wireless customer saw their bill for wireless phone calls fall a whopping 11%. At Verizon the drop was 7%.” For now, revenues from data plans have offset the loss of voice revenues at AT&T and Verizon. How long can AT&T and Verizon milk the data cash cow? It depends on whether people will accept higher charges for data plans and more restrictive data caps. With many people on tight budgets, it’s difficult for mobile phone operators to get away with large price increases for their data plans. Indeed, the increasing number of Wi-Fi hotspots (and free Wi-Fi), it’s not hard to see people moving to cheap prepaid plans on a regular feature phone for those rare voice calls, plus an iPod Touch or an iPad (for use when in the vicinity of a Wi-Fi access point).
I used my iPhone (which I recently sold) primarily for email, web surfing and applications (Google Maps, Facebook, Foursquare, Skype, etc.) and rarely for voice calls. I have the Wi-Fi only iPad so I don’t use it to make voice calls except via Skype.
What’s your experience? Have you been making fewer voice calls on your smartphone?
You have heard it here at MuniWireless first. This subject of reduced voice revenue will become more intense in the coming quarters, even spurred by the wireless companies themselves as they look for sympathy (and more money) from their postpaid customers.
Prepaid and or no-contract is the future. And the carrier who figures out how to “blend” data charges with “rewarding” customers who use their “free” Wi-Fi locations will be the winner.