LUTON, United Kingdom-A new report compiled by Strategy Analytics shows low-spending customers and the introduction of prepaid services in Europe are causing average revenue per user rates to progressively decline for many cellular providers.
“While cellular ARPU levels are now showing signs of bottoming out in some European countries, there is still a long way to go for many regions,” said Declan Lonergan, Strategy Analytics’ director of wireless services, Europe.
The report, “European Cellular User Survey 1999,” presents the results of the company’s latest study of European cellular users’ behavior and attitudes, focusing on usage patterns, landline substitution, churn and value-added service opportunities.
New cellular customers in Europe are reporting much lower monthly expenditures than other customers who have had a cellular phone for at least four years. Just 1 percent of new users spend more than $100 per month on their cellular service compared with 33 percent of experienced users, said the report.
Forty-two percent of cellular users in Europe are consumers, 35 percent are business users and 23 percent are combination users, with average expenditure across all user segments at $70 per month. The average daily usage for all cellular users is 21 minutes, although the largest segment is the 5-10 minutes per day group, which accounts for 32 percent of users.
The report said general customer satisfaction with overall cellular service is high in Europe, with 45 percent of those surveyed indicating they were either satisfied or very satisfied with their cellular service.
Churn does remain a major challenge for European cellular operators though. Strategy Analytics found 20 percent of customers had switched service providers in the previous 12-month period. Digital service upgrade also contributed to churn in Europe, with 16 percent of customers citing this as the reason for switching providers.
“While our study did reveal significant opportunities for value-added services, particularly in the area of short messaging service applications, there is little doubt that the impact of falling ARPUs on operator profitability will be felt by the networks for some time to come,” said Lonergan.
“Combine this with the finding that of those customers who have recently churned between networks, almost one in four did so to the avail of a ‘special promotional offer’ on the competitor’s network, and you quickly begin to see the added customer loyalty challenges that lie ahead. This is a particularly relevant finding when you consider that the introduction of mobile number portability on Europe’s networks will facilitate even more aggressive poaching of customers,” he said.
