Telecom: A Snapshot of the Global Data ARPUs

I believe we are racing towards a global economy. With th US economy getting colder, the heat is quickly going to turn to India to kick off and see some high returns quickly. That’s a theory that I am going with, for now.

Here’s a snapshot of the Global Telecom market. It helps to keep this chart in the back of your mind.

Global ARPU

PS: India is the lowest in terms of “Wireless Data ARPU”.

Credit: I stole this from Alec Saunders’ Blog.

5 Responses to “Telecom: A Snapshot of the Global Data ARPUs”

  1. Amit Malik says:

    Can u please give me the ARPU (operator wise) for the period march 07 to march 08????

  2. Vijay Anand says:

    Great discussions. Truly what a blog was meant for!

    Coming back to the topic,

    RJ: You raise a very valid point, but I think what you are talking about is the fundamental flaw with datasets to begin with. Averages tend to shrink the extremes and sometimes tend to paint a very different picture than whats really out there. If we do “explode” the ARPU numbers of the Indian user, I am sure it will range all the way, some bits shattering even further than the higher ranges. What would be an interesting exercise following this would be to take the spread and segmentize it on the basis of demographics, usage and spending patterns.

    The story of the Indian telecom industry is a very murky one – one with the lot of bloodshed. As one associated with a telecom group, its quite obvious why none of the foreign players could make a stance here. The customer is reluctant to pay (markets beating down prices), but the operator still wants to make money, and the only guy who gets beaten to a pulp in between is the vendor. Almost no operator in India, pays for infrastructure. everyone these days has this standard slogan of “come, install, run, maintain and do revenue sharing”. In some cases, marketing your service also gets added to that list. If you are a startup, that statement just meant raising money for infrastructure and hoping that things happen. Not a pretty picture.

    Krish: As much as I love numbers since they are absolute, they also can strip the context.Thats what needs to be put in. We just need to make the adjustments and know what it means for business, and opportunities. So yep, we certainly need to figure out what numbers mean in relevance to the market.

    Old Hand: Can you really push GPRS? That’s like asking people in Rural India to sign up for Internet connections. Their first question always is “Why?”. Services will drive adoption. Apart for the fact that I check email on the go, I dont have a need for GPRS. How many people have the need to be “always connected”? – as much as I do envy such non-tangled lifestyles!

    TRAI made an announcement yesterday that they are abolishing Access Deficit Charges, which has a direct impact as to why VoIP/Digital Telephony was strangled to death here in India. With that getting lenient, we do have a chance of seeing the VoIP Market open up. Which means, it is possible, and there is an opportunity for application developers to come up with clients that can make VoIP calls, and provide a host of value-added features.

    I think “Raising the ARPU” is the wrong way to look at it. or atleast its the wrong place to start. Start with applications with make sense, a slew of applications that target everyone from a farmer, the hip teenager to the savvy professional, and with usage, the ARPU will magically go up on its own – or maybe it still wouldn’t, and we’d make new discoveries as to how economics kicks in with scale.

    While that argument goes for the standard ARPU, this is specific to the wireless data domain. I am on a fixed Rs.20 / Rs.300 a month Unlimited Plan. Is there even a chance for it to go up?

  3. Old Hand says:

    Great post and comments. Isn’t there is a direct corelation in this chart between % contribution of data revenues and ARPU. We can expect ARPUs in India go up as more people sign up for data.

    Question is, do you see Indian operators doing any marketing / advertising spend on motivating users to get GPRS accounts. All marketing spend today is purely to reinforce the brand – visit any major city in India and you’ll see large fancy billboards with nothing but the brand written on it.

    Operators : Get moving fast on signing up people for GPRS/data or the profitability will not hold up. Last few years have been good because the onetime account setup charges showed up in revenues. As user #s saturate, those revenues will drop, only voice usage charges will remain.

  4. Krish says:

    Sridhar,

    Great points. Blind transition of western metric to Indian context without suitable customization would yield skewed outcome, leading to incorrect inference. You just exposed one.

  5. RJ Sridhar says:

    Vijay – thanks for the chart – very interesting. I’m curious to know if the data takes into account those users who explicitly sign up for data plans, or is just calculating data revenue across the entire subscriber base (my sense is that the few Indian users who have a data plan are certainly paying more than the Rs. 40 per month the chart seems to indicate)

    On a related note, over the past year, I’ve seen a fair amount of hand-wringing in the media about the low ARPUs in India and what that means for the long-term; I think a more meaningful question is – How high can ARPU’s realistically be in the Indian context? At the end of the day, a significant part of the telecom spend by consumers is somewhat discretionary in nature, and its’ too much to expect that the average Indian (and we can completely exclude us bloggers on this board) will spend Rs. 1000+ a month on telecom (a $25 ARPU); a better way is to normalize ARPU by a metric such as per-capita income and then do a comparison (would be interesting to overlay per-capita income stats on the above chart!)

    That said, Indian operators have done pretty well on profitability; a metric such as APPU would be a lot more meaningful to track IMHO; lets not forget that the cost structure that Indian operators face vis-à-vis their counterparts in more “developed” markets is also quite different; (1) Labour – for setting up towers, laying cables etc, which are a pretty big factor in the US for instance, is available at a fraction of the cost in India; (2) The average Airtel network engineer and customer service rep is making far less than his/her US counterpart; and (3) Indian operators have done a good job in beating down equipment vendors in pricing (having covered wireless infrastructure companies, I’ve seen that every single western vendor that’s gone to India has got a nosebleed in terms of profitability – Ericsson somehow magically survives/thrives, but that’s a story for another day)

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