Mobile operators are abandoning the previously predominant model to subsidize handsets and to, in return, lock customers in on long contracts with elevated service fees.
The death of the model should be mourned by no one since end-users have been given choice and flexibility through a multitude of non-binding, cheaper and flexible service options with generous – or even unlimited – allowances. Operators have seen customer churn decrease as end-users hold onto their handsets longer. As a direct consequence, EBITDA margins have increased.
The fourth quarter has traditionally been the most difficult for mobile operators in mature markets. Many customers join, but many others are leaving and operators typically dilute margins by having more equipment (and more expensive equipment) in the sales mix compared to the rest of the year.
Subscriber acquisition and retention costs are generally higher in the fourth quarter when the financial discipline of mobile operators is put aside to promote equipment at prices well below the operator purchase costs – as long as existing customers promise to stay or new customers are ready to commit to plans with high monthly fees.
But even though there are temporary setbacks, our industry is gradually moving in a more rational direction: Equipment subsidisation is less frequent today and many operators have stopped binding customers to long, inflexible, contracts. Mobile operators have developed their service offerings and are today capable of explaining why customers should stay – without having to throw in a new iPhone as part of the package. Continue reading 2016 was a great year for mobile customer loyalty→
Nonstop Retention® benchmark: Calculating and comparing the Nonstop Retention Index for mobile brands (MNOs, sub-brands and main MVNOs) in one specific major European market. Identifying best practice and showing current trends. Recommending propositions and actions to improve customer loyalty per brand.
The four largest wireless carriers in the US – Verizon, AT&T, T-Mobile and Sprint – all claim that they have (essentially) abandoned the two-year-binding-contract-with-subsidized-phone model.
At least in the consumer market; the model is still around in the business market.
Mid November last year, T-Mobile USA launched its 10th uncarrier initiative, Binge On. It has been the most controversial uncarrier launch so far.
Why? Binge On zero-rates commercial video services – so that T-Mobile customers can watch as much as they like without emptying their data bucket. The trade-off? Video streams are slowed down to about 1.5 Mbit/s which means that image quality suffers – which is visible, but perhaps not on smaller screens like smartphones and tablets. Continue reading 34 petabytes of zero-rated video streamed since launch of Binge On→
Why should an operator complement their customers’ experience of mobile data with Wi-Fi? To improve customer loyalty?
Wi-Fi is a positively loaded term for many users – which speaks for using it as a retention tool. But are there operators that successfully reduce churn – without using more on customer retention – by having Wi-Fi included in their mobile propositions? Continue reading Wi-Fi – the last piece of the customer retention puzzle?→
Decoupled, non-binding, unsubsidised: A game changer?
Our analysis shows that mature market mobile operators on average use 15-20% of service revenue on subscriber acquisition and subscriber retention cost (SAC/SRC). In most cases without growing.
When Canning Fok, the co-managing director of 
