ARPUs up for most CDMA2000 carriers; UMB needs push

This blog is a part two of my conversation with CDMA Development Group's (CDG) Executive Director, Perry LaForge.

With China Telecom now pushing CDMA in China, CDG views this initiative, as a tremendous opportunity for CDMA in China. It has been working closely with China Telecom, a CDG member, as the carrier transitions China Unicom's CDMA assets.

LaForge says: "Having China's largest wireline operator focused on expanding CDMA2000 services and bundling them within their telecommunications portfolio will only increase their opportunities for success. We also look forward to seeing China Telecom introduce into China a large variety of new mobile broadband services enabled by Rev. A."

Let us now look at global operators and how they have attempted to crack the ARPU (average revenue per user) challenge.

According to LarForge, looking at recently-announced Q2 numbers, ARPUs are up across the board for most leading CDMA2000 operators and a lot of what is driving that is wireless data ARPU.

* In the US, Verizon Wireless and Sprint Nextel have announced increased wireless data ARPUs in Q2 2008. Verizon's total data ARPU is up to $12.58, representing 24.41 percent of their total ARPU and a CAGR of 31.3 percent. The ARPU generated by Sprint's CDMA2000 subscribers has increased by 21 percent year-over-year to $14, representing 21.43 percent of their total ARPU.

* In Japan, KDDI continues to see wireless data ARPUs exceeding $20. LG Telecom increased its ARPU by 18 percent since launching Rev. A.

* In Europe and Russia, CDMA450 operators are seeing ARPUs well above $50. For example, Telefonica 02's non-SMS data ARPU now accounts for 43 percent of its total ARPU in the Czech Republic.

Since launching EV-DO, Skylink's profits from high-speed broadband data services in Russia have increased from 7 percent to 35 percent. In Norway, Rev. A is helping Nordisk Mobiltelefon get a 100 percent return on their investment in less than two years with only 100,000 subscribers.

* In Latin America, Centennial's ARPU from its Rev. A network in Puerto Rico is one of the highest in this market reaching $65 in a marketplace where the average for its competitors is somewhere in the $50s.

Data revenue is a key driver in delivering Centennial's competitive edge, currently accounting for approximately $7.50 per user on a monthly basis, and growing.

* In Africa, Starcomm's Rev. A subscribers in Nigeria generate in excess of $80 ARPU, which is more than three times higher than $24.25, which is the combined revenue they generate from voice and data from its average subscribers.

Clearly, technologies such as EV-DO Rev. A and HSPA are helping operators realize the expectations of 3G, which includes increased ARPUs from wireless data. CDMA2000 has cracked the ARPU challenge, for now, and is meeting the industry's expectations for 3G.

Finally, what's the status with UMB (ultra mobile broadband). Are the operators ready to embrace this technology?

As of now, no operators have made a commitment to UMB, yet.

LaForge says that LTE has garnered the most outspoken support when it comes to OFDMA-based mobile broadband technologies. The CDG is committed to assisting all of its members as they seek to complement their 3G CDMA assets through interoperability with LTE, Mobile WiMAX or UMB.

Low-cost mobile broadband access for all

Today, the cell phone has become a commodity, a comman man's device. In India, especially in the metros, it is hard to find someone not carrying a cell phone. It has become so convenient to use one.

Imagine what it used to be a decade back. Cell phone prices were very high as were the call charges. Today, the story has reversed. It has been well established that Wireless is the most cost-effective way to bridge the digital divide.

Higher prices of handsets were posing a barrier to growth in developing countries. This has changed considerably since. Lowering of handset prices has ensured that the maximum growth has been in the developing countries.

However, more needs to be done as the rural-urban 'digital' divide is still significant. We first heard of ultra low-cost US $40 handsets a couple of years back. These were developed to lower the entry barrier in developing countries and to connect the unconnected.

We also saw US $30 handsets come into the fray. And now, low-cost 3G handsets are starting to do the rounds.

The International Telecommunication Union (ITU), the operators, the handset vendors and their partners -- all need to be congratulated for having done such commendable work.

However, more needs to be done to truly make low-cost access available to all. ITU has recommended in its paper that low-cost 3G handsets "would create economies of scale for handset makers and their component suppliers. It would also make third-generation mobile services accessible to a much wider user base. The handsets will be available at a wholesale price about 30 percent less than the typical entry-level 3G phone and fully-competitive with the multimedia second-generation handsets on sale today."

This will happen eventually. And, when it does, these low-cost 3G handsets would become affordable mobile broadband devices for the masses. This would be the first step toward providing true mobile broadband low-cost access for all!