[IP] Cell phones and contracts
Begin forwarded message:
From: Andrew Seybold <andy@xxxxxxxxxxxxx>
Date: October 10, 2005 4:58:56 PM EDT
To: dave@xxxxxxxxxx
Subject: For IP if appropriate
Dave—the comments on IP about cell phones and contracts are
interesting, here is some information that put things in focus.
The “cost” to acquire a new wireless customer today, in the United
States is about $250. This includes the buy-down on the phone, and
marketing and sales costs. The buy-down on phones has been going on
for a long time. As we approach +60% penetration of wireless phones
in the US (as compared to 90-over 100% in many countries), the cost
of acquiring a customer continues to climb.
As more MVNO’s (Mobile virtual Network Operators) come into the
market, along with those who are already in the market such as Virgin
Mobile, we will start to see a shift away from phones that are
subsidized, and more options when it comes to contract offerings.
In the pre-paid world of the likes of Virgin, there is no phone
discount because there is no long term contract, and the cost per
minute is higher than under the terms of a contract.
So we have lots of choices, the best, and most affordable of which is
still the two-year contract with a buy-down on a high-end phone. The
wireless phone service, on an average per minute basis in the US is
much cheaper than in Europe and Asia, and it shows since the average
customer in the United States uses over 600 Minutes of voice services
every month—as compared to the second highest, which is Hong Kong at
just under 400 minutes per month.
Best regards
Andy
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