Wireless Data Is The Key For Telecom Carriers - Yankee

Thursday, January 24, 2002

Wireless data services will become increasingly important in the next four years, according to a new study by the Yankee Group. 

The research and consulting firm said voice services currently account for as much as 95 percent of wireless carriers' revenues, but that is expected to change. 

In 2001, 114.3 million subscribers were voice-only, with 11.4 million voice and data subscribers, the study said. In the next 12 months, voice-only users are predicted to reach 120.7 million, with the number of voice and data subscribers nearly doubling to 22.3 million. 

By 2006, the Yankee Group predicts 100.4 million voice-only, compared to 96.3 million voice and data. 

Knox Bricken, a Yankee Group analyst, told Newsbytes data services range from basic messaging - including short message service (SMS) and checking e-mail via a mobile phone - to advanced uses such as field force automation, customer relationship management, and location services that help people search for the nearest gas station or buy movie tickets. 

The study said "churn rates," or turnover among wireless customers, are up to 25 percent annually and continue to increase. Churn rates that high are significant, the Yankee Group said, because wireless carriers spend an average of $320 to acquire each new customer. 

Many carriers are hoping wireless data services will increase "stickiness," or retention, which will reduce churn and increase the profit per customer, the study said. 

Bricken said several things must happen for the predicted growth to occur. 

"There is a great opportunity for data services," said Bricken. "But for it to be successful, speeds must increase, handsets must improve, customers must be educated and the plans must be priced effectively for consumers." 

"It's going to take a while for that to come together," she added. 

According to Bricken, some of these developments are happening already. She said all handsets soon will be data-enabled, and companies will give people incentives to get them to use data services. 

"Carriers like Cingular, AT&T and Verizon are rolling out GPRS, which is 2.5G," she said. "Sprint is planning to roll out CDMA 1X, which is its version of 3G, in the second quarter of this year." 

The Yankee Group is at http://www.yankeegroup.com . 

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