U.S. Mobile Service Providers Have Less to Fear from OTT than Others

Since the fortunes of U.S. mobile service providers now are almost entirely dependent on new revenue generated by data usage, the good news for U.S. mobile service providers is that data revenue grew five percent quarter over quarter and 19 percent, year over year, to reach $19.3 billion in the second quarter of 2012.

Data revenue now represents almost 42 percent of the U.S. mobile industry service revenue, and should reach $80 billion for the full year, according to analyst, Chetan Sharma.

The good news is that mobile service providers have a few more years before data subscriptions reach saturation. The bad news is “what do we do after that?”

It’s a very good question. According to the CTIA, annual U.S. wireless revenue is about $170 billion. Data revenue is about $63 billion, making wireless data a 37 percent contributor to total revenue.

If average user revenue per month is $47, that implies a contribution of about $17.39 per user for wireless data, including text messaging. That also implies about a $29.61 average contribution for voice.

That $29.61 per month is an area of uncertainty, going forward, though less an issue for U.S. service providers than for providers in regions such as Western Europe. Over the top mobile voice and texting apps now affect traffic for almost 75 percent of mobile service providers operating in 68 countries, surveyed by mobileSquared as part of a project sponsored by Tyntec.

About 52.1 percent of respondents estimate over the top mobile apps have displaced about one percent to 20 percent of traffic in 2012. That’s a clear issue since traffic lost means lost revenue as well.

Almost 33 percent of respondents expect one percent to 10 percent of their customers will be using OTT services by the end of 2012, with 57 percent of respondents believe 11 percent to 40 percent of their customers will be using OTT services in 2012.

But 10.5 percent of service providers anticipate more than 40 percent of the user base will be using OTT services by the end of 2012.

Over the top voice arguably poses less an immediate threat to U.S. mobile service provider revenue, since the internal U.S. market is geographically large enough that most calls are rated at domestic rates, not cross-border rates.

Still, Verizon Wireless has taken a proactive step by instituting its new “Share Everything” plan that essentially converts the former voice and texting plans into a flat rate network connection fee of $40.

That roughly corresponds to the $29.61 for voice and perhaps $20 for unlimited texting plans, a total of $49.61, which takes care of the voice and messaging revenue issue.

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