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Voice Competition in US Wireless Market

The latest Wireless Network Strategies service report from Strategy Analytics, "Wireless Operator Performance Benchmarking Q3 2005," highlights increasing signs of weakness in the US wireless voice market, with average revenues per user (ARPUs) for voice services dropping 8 percent year and data services failing to make up the gap.

This quarterly report provides a health check for the wireless operator community, tracking the operational and financial performance of 61 individual operators, accounting for more than 60 percent of global wireless subscribers.

Despite strong subscriber and revenue growth in emerging markets, the US wireless market is starting to be hindered by increasing weakness in the voice market. "The last two quarters have seen US wireless voice metrics move to a new rate of decline," comments Phil Kendall, Director Global Wireless Practice and author of the report.

"The decline in per-minute voice revenues continues, with rates slipping from 14-18 percent in 2003 to a new low of 22-24 percent. Voice ARPUs are declining even faster, falling from 3-5 percent in 2003 to 8 percent today. For a long time the US was a shining example in how to increase wireless subscribers while still growing average revenues and margins; that climate is now starting to change."

David Kerr, Vice President, Global Wireless Practice, adds, "Data just cannot make up this shortfall at present. While most other regions are seeing data ARPUs struggle to grow, the US is at least posting annual growth here in excess of 50 percent. But even this growth rate is down significantly from recent quarters. The carriers will need to work hard to reverse these trends and avoid falling into the same trap as Western Europe where margins have faltered over the last 18 months."

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