Sprint Nextel Still Winning The Mobile Internet Wars (S)

Dan Frommer | November 11, 2008 4:30 PM

brick-cell-phone.jpgDespite its problems, No. 3 wireless carrier Sprint Nextel (S) is still beating its rivals at a game they all want to win: Getting subscribers to shell out for mobile data services, ranging from text and picture messaging to mobile Web subscriptions, BlackBerry plans, etc.

  • During Q3, Sprint subscribers -- not including Nextel, its walkie-talkie network with less-advanced phones -- spent an average $16.50 per month on data services.
  • Even including Nextel, Sprint came in first place with $13.50 per month average data revenue.
  • Verizon Wireless, the No. 2 carrier, came in next with $13.30 in average monthly data revenue.
  • AT&T, the biggest carrier, reported $12.30.
  • T-Mobile reported $8.90. (But they're just getting started rolling out their fast, "3G" data network, which had limited their data sales.)

Why does this matter? Because now that most Americans own cellphones, carriers are counting on data services for most of their revenue growth.

Can Sprint keep its lead this quarter? The carrier is getting good uptake for its $99/month "Simply Everything" plan, which includes unlimited data use -- and contributes $30 per user, per month to Sprint's data revenue tally.

Meanwhile, Verizon's (VZ) levels might dip in the next few quarters as they integrate customers from Alltel, the wireless carrier it's buying for $28 billion.

Similarly, AT&T's data bills could grow as more of its subscribers buy Apple (AAPL) iPhones and RIM (RIMM) BlackBerries, which require monthly Internet subscriptions around $30 -- plus whatever text messaging package buyers choose. Note that iPhone App Store purchases are not included in these figures, because AT&T doesn't bill the customer for those downloads -- Apple does.

wireless-data-arpu-q3-2008.gif

See Also:
Are Over-The-Air iTunes Downloads Coming Soon?
Hey Dell, Where's Your iPhone Killer?
Apple's iPhone The Best-Selling Phone In U.S., Beats Motorola's Razr

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20 Comments

bobthegreat said:
Dan:

This is one of the most interesting and thought provoking posts I have seen here. It is very counter intuitive because Sprint is behind in blackberries, iphones, and I believe in the large enterprise segment (vs. AT&T).

So, if the data ex-SMS is still like the chart, they must have done or be doing something right. Probably there are lessons for all in the industry to learn.

Do you know if these numbers include or exclude SMS?
Thanks for the kind words!

SMS included. This is the best I'll be able to get from the companies. But I can see if M:Metrics or other research firms have guesses for SMS-excluded data ARPU.
EPS said:
From what I hear, Verizon is planning to force all customers who buy internet capable dumbphones and smartphones to shell out for data plans, so that should help their numbers as well, or at least mean less of a decline due to Alltel.
Steve Frechette said:
Hmmmmmm, why don't i believe this post?

1. maybe because Sprint's stock price is indicating an equity wipe out.

2. I stopped by the Sprint store and laughed my ass off at the crappy Instinct (when compared to iPhone, G1, or Bold).

3. you know a company is going Ch11 when the CEO falls in love with himself and now has to appear in every commercial.

Any way you cut it, Sprint is garbage. And you can add the Clwr/Xohm abortion to the garbage pile.

Steve, that's fine, but this is straight from each company's Q3 reports.

One thing I wonder: How much data ARPU they get from Kindle accounts, and whether it's materially positive or negative to their numbers.
Bill G (URL) said:
My guess is that Sprint has maximized data revenues by pricing its data services more attractively. Their per subscriber pricing is lower, but far more subscribers sign up for data plans so their average data $ per subscriber is higher.

The other carriers may either be:
(1) Pricing to maximize profitability (instead of maximizing revenue or growth)
(2) Pricing to hold demand at a certain level because of network capacity issues. (Sprint presumably has lots of excess capacity)
(3) Stupid
bobthegreat said:
@ bill G

(3) is a certainty. But it applies to Sprint too. It may also be that Sprint now has a larger portion of corporate users than others and hence higher SMS and data spend.

It may also be a revenue allocation issue, on how revenue from bundles is allocated to services.

Very counter intuitive to me.

B
Ori Matalon (URL) said:
@EPS, we are alreasy seeing it here at Israel, where a most o the carrier force you to buy a phone with a mandatory data plan. Carriers make a lot of money from selling it to people who don't need and will not ue it. My grandmother which is 80+ years old has a 3G dataplan on her cell phone, and she even don't know how to spell the word email...

my comments at http://www.commentino.com/orim
J-boy said:
Pardon me if i missed it, but doesn't sprint force you to buy a data plan if you're going to purchase a smartphone? I could imagine alot of people getting the pearl or centro because of it's texting abilities and because they look "cool." So if what I think is right, the centro and pearl would need a data plan on that line.
J-boy: Most (all?) carriers force you to buy a data plan to qualify for the rebate/subsidy on smartphones. Sprint forced me to buy a $10-15/month EVDO plan a few years ago with my Treo; just as AT&T forced me to buy a $30/month plan with my iPhone. Makes sense for me, as I was going to buy it anyway, but I'm sure some people don't use it, especially on lesser Windows Mobile or RIM devices.
netbook nerd (URL) said:
Sprint is king b/c they've been doing mobile internet for years. Now that people are looking at it, you see that it's one of the few areas where they shine. They have TV, and a deal with the NFL.

Also, they are the most flexible. Dan, you would have been able to setup tethering for the 10-15/month you were spending and you'd be able to do the same now. Try doing that with AT&T.

As Sprint switches to "4G" expect this yield to increase even further and faster than their competition.

Now if they could only figure out how to stop bleeding customers
simon andrews (URL) said:
One factor could be that Sprint have been pioneering ways of using mobile content in marketing. As well as the In the Motherhood project they have just launched a realy smart brand curated content project with Heroes. This drives the brand data use and video views on the network.
http://www.nbc.com/Heroes/heroesdestiny/
(Disclaimer - the project was created and managed by my company MindShare)
Rubba1 said:
This is in regards to Steve Frechette's post. I just purchased the Instinct after owning an iPhone. I think the Instinct is a much better phone and Sprint's data network far surpases AT&T's data network. I had nothing but problems with my iPhone and many of my friends alike. I have been a Sprint customer for years and although they had some customer service issues in the past, they have since then turned it around. I would recommend Sprint to anyone. Especially the Simply everything plan. Who needs a wireline phone when you can have a cell that is unlimited for only $99 a month. Can't beat it. Oh ya, and in reference to Sprint's CEO loving himself and being on the commercials, I think it is great. Sprint is really a stand up company when you compare Verizon or AT&T's adds that put down the other carriers. To me that says Sprint has class.
bob said:
My guess is that the lower ARPU voice only users switched to somebody else just because it's too easy, while users on data plans have a somewhat higher barrier for switching, either because they are locked in for the device rebate, or find the trouble switching to a different set of data apps not worth it.
brickphone said:
And what mobile internet war is the person in the picture waging? The mobile internet war circa 1988?

The only war he'll wage with that brick is if he bashes an iPhone to bits with it. I doubt it would leave a scratch on the Moto.
nita said:
Oh yeah!I agree with what Rubba had said. SPRINT has class. Other carriers put down others instead of telling their customers how great they are. What's up with Verizons commercial the Dead Zone? It's scary and the nerd guy? ngeeeeee. I prefer to stay with SPRINT like many of my other friends. Also, although i love my MOTOQ to death I will replace it with INSTINCT because i see how it works it's FASSSSTTTTT.
Zac Phillips (URL) said:
I have had all of the other carriers, and have stayed with Sprint the last four years becasue of their service quality. Say what you want, but their service is top notch. The instinct is a great phone. I have it, I have had blackberries, treos, centros, all the smart phones and some that werent. The instinct is a great PHONE. It is not an iPod that has phone ability. Although, the music player is just as good as the ipod. i have used it when I forgot my ipod before in my truck through the aux jack. Great that is has 3.5mm jack... Anyways. Sprints problem is not their data (GREAT SPEED), or their phone call quality. It is the morons in customer service. If it were not for the great pricing I have on my simply everything, I would bail. If T-mobile offered this same plan, I would bail. But their everything does not include data.

When the Android phone for sprint comes, i will switch to that, as it is the only phone worth leaving the instinct for, and stay with sprint. Because they are at 3.5G, not barely on 3G, and getting ready for 4G. ATT network is trash (here in AZ), as is Verizon/Alltel. T-mobile is not bad, as long as you have a G1...Sprint is still king here for service...hate the customer service, they need to fix that or I may be forced to leave.....
Rubba1 said:
Actually I read that Sprint just launched it's 4G network in the Baltimore/DC area. Wimax or ZOHM as they call it seems to be the future and the other carriers are barely 3G. I just got a Sprint wireless card which I am using right now to submit this comment. It works great. Lightning fast speeds! I did have a Verizon air card. It sucked. So once again I am glad I went with Sprint. Can't wait for 4G to come to my area.
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Ken C said:
@Bill G -- I agree. Sprint has the most reasonable pricing when it comes to unlimited data plans so it must be that more people sign up.

In a family plan with multiple lines, Sprint charges the primary person only $15/month and all additional people pay half price. In my case, I pay $15/month and my wife pays $7.50.

Considering that AT&T charges $30/month and Verizon nails its customers for $40/month, Sprint provides the best value and it is a 3G network too, so I am comparing apples to apples.

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