Carriers Need New Pricing Model as ARPU Uplift Stalls Amid 5G Upgrades: SA

Mobile operators are struggling to create average revenue per user (ARPU) uplift from 5G network upgrades as mobile data revenue in Q4 fell below $1 per gigabyte for the first time, reported Strategy Analytics Tuesday. Cellular data traffic grew 35% year on year in Q4, but total mobile service revenue inched up just 0.6%, it said. Weak service revenue growth in strong 5G markets -- South Korea and China -- “paint a challenging picture for consumer 5G value creation across the globe in 2021,” said the researcher. Subscriptions used on 5G networks grew from 2.1% in September to 3% three months later; China had 80% of global totals, it said. Speed-based, tiered unlimited data plans in Finland helped lift ARPU by 17% over the past five years, compared with a 15% decline across Western Europe, noted SA. “Volume-based data pricing is going to cause a headache for many operators conditioned to utility-based revenue or cost per unit thinking,” said Phil Kendall, director-service provider group. With the capacity gains offered by 5G “diluting value per Gigabyte, operators need ‘more for more’ pricing that offers revenue uplift through better experiences and richer content rather than through more data,” he said. Carriers need to “educate users away from high-volume low-cost plans and the idea that 150GB is meaningfully better than 100GB,” said analyst Josie Sephton. Consumers are picking price plans that fit their budget first, data usage requirements second, she said: “We are in a data pricing merry-go-round that needs to be reset.”