Report: Mobile Carriers Need to Wean Customers Off Device Subsidies

Mobile carriers aren’t reaping the returns from their device subsidies and need to break the long-held customer incentive, according to a new report from ABI Research. Whereas mobile connections are growing at a 10.9% compound annual growth rate (CAGR) worldwide from 2008-2013, carrier revenue growth is only increasing at a 4.2% CAGR, ABI points out. The single largest cost component for a mobile carrier over the life of a subscriber’s contract, device subsidies represent 68% of the revenue derived from a typical 24-month mobile device service contract, ABI analysts note.

Several factors are going to up the pressure on device subsidies over the next two years, they say, including:

• Over the Top revenue loss
• Competitive price pressure
• Regulation (see EU roaming regulations)
• Multiple device ownership – smartphones, tablets, smart glasses, and other wearables