Wireless revenue of American telecom operators such as US Cellular, AT&T, T-Mobile, Sprint and Verizon increased 2 percent to $62.7 billion in Q4 2017.
Higher equipment revenue from customers purchasing unsubsidized devices on equipment instalment plans (EIPs) and adoption of expensive smartphones such as Apple iPhone X were the growth drivers.
T-Mobile US, a part of Deutsche Telekom of Germany, was the only Tier 1 U.S. carrier to achieve increase in service revenue year-to-year in Q4 2017.
Other operators such as AT&T, Verizon and Sprint expect their service revenue to gradually improve in 2018 as the bulk of subscribers have now transitioned from post-paid contracts to discounted service plans provided to EIP customers.
T-Mobile, AT&T and Verizon reduced post-paid phone churn in Q4 mainly due to wireless customers’ increased satisfaction with their network coverage and accelerated data speeds enabled by LTE-Advanced technologies. Sprint, a SoftBank-owned telecoms, could not reduce churn.
The report said mobile video bundles are assisting telecom operators to reduce churn as AT&T (HBO Now), Sprint (Hulu) and T-Mobile (Netflix) now provide free over-the-top (OTT) video subscriptions to their unlimited data customers. Wireless operators are using free video as an added incentive to retain wireless customers.
5G
AT&T, Sprint, T-Mobile and Verizon expect to launch commercial 5G services by the end of H1 2019. They will struggle to monetize from the new network as new revenue opportunities from 5G will be initially limited due to lack of availability of compatible smartphones which will not be available until mid-2019.
US wireless operators will not be adding significant revenue from Internet of Things (IoT) will be powered by 5G connectivity. IoT is expected to power areas such as autonomous driving and remote surgery. 5G offers greater performance and cost efficiencies, and will enable operators to lay foundational network architecture to support new business models that may arise.
Wireless revenue among Tier 1 Canadian carriers rose 7.7 percent to $6.2 billion due to post-paid additions spurred by shared data programs and higher data usage arising from the accelerated speeds offered by LTE-Advanced services.
Refraining from offering unlimited data plans is benefiting Canadian telecom carriers as service revenue continues to increase as subscribers migrate to larger data tiers and overage fees remain, said TBR.
Canadian carriers are also creating new revenue streams by expanding their connected device portfolios in areas including connected car, home security and wearables. The average revenue per user (ARPU) generated by these services is significantly less than that generated by phone connections.