The Road Ahead for Wireless Carriers

by Matt Klassen on March 27, 2012

It’s a tough life being a wireless carrier these days, once stable mobile networks shaken to their core by the market shift from voice communication to data delivery. In fact, as a report issued from consulting firm PriceWaterhouseCoopers (PwC) has found, in a market where mobile penetration levels are closing in on full saturation, the old benchmarks of success such as market share and sales volume are becoming increasingly less relevant.

Instead, the report suggests, the way forward for carriers towards increased profitability in the current wireless market is a shift in focus away from market share and product volume towards customer retention and a renewed focus on profit margins, a shift, PwC recommends, that needs to include the lower end of the market spectrum as well, pre-paid subscribers.

Simply put, with the wireless sector rapidly evolving, the way to achieve sustainable growth is evolving as well, driven less now by the push for more subscribers and more by the need to make existing customers more profitable.

The key to long term growth and success in this time of flux and change in the wireless market is simple, the PwC report explains, it all lies in the current subscriber. For wireless carriers to continue to grow they can no longer depend on expanding their subscriber base, since, as I’ve mentioned before, mobile technology has almost reached the saturation point here in North American.

Instead, the new mantra of the wireless age should be customer valuation, an increased awareness of how carriers generate revenue from customers at each price point followed by an increased focus on customers at the lower end of the revenue scale. While a carrier’s customer base includes the valuable data consuming smartphone customers, to achieve real growth carriers will have to realize that bigger isn’t always better, and that the lower end of the customer revenue spectrum has the potential to generate revenue growth as well. 

Long thought to be the castoffs and dregs of the wireless world, the PwC report states that in this evolving wireless landscape a renewed focus on prepaid subscribers will be essential, concluding that if handled right, “tomorrow’s pre-pay customer could be just as profitable as a ‘premium’ smart phone user.”

The point is simple, the wireless market is changing, and if carriers want to stay relevant they’ll need to quickly cast off their antiquated revenue models in favour of one’s that recognize the growth potential in the current wireless landscape; plans that offer ways to make current customers more profitable. Of course making customers more profitable means that carriers will need to offer them more services (and a reliable network), an expansion that relies on, in an unfortunate Catch-22, increased revenues.

That said, in this current mobile landscape carriers need to realize that there are more customers out there other than the premium smartphone user, customers that are looking for reliable and affordable wireless service and who are willing to pay for it.

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Pursuing the Prepaid Phone Option —
October 31, 2012 at 5:35 am

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