T-Mobile to Support Wi-Fi Calling on iOS 8 iPhones

T-Mobile US says it will enable Wi-Fi calling from iPhones running iOS 8. That will mean at least 90 percent of all T-Mobile US smartphones are able to support such calling, according to Mike Sievert, T-Mobile US chief marketing officer.

“Already today, T-Mobile provides Wi-Fi Calling capabilities to far more customers than any other major U.S. wireless provider,” said Sievert. “Already, there are 17 million Wi-Fi calling-enabled customer devices on our network.”

About five million T-Mobile US customers use Wi-Fi Calling during any given month.

In what sort of market would a constant aggressively support  Wi-Fi calling features that are functional substitutes for the core functionality of a mobile phone, including both voice and messaging?

There is a tactical answer and a strategic answer.

Tactically, underdog competitors often try to attack and disrupt existing markets to gain share. Emphasizing Wi-Fi calling, even at the risk of losing voice revenue, is one way T-Mobile US, the smallest U.S. major mobile service provider, can create distinctiveness and add value.

T-Mobile US gains more than it loses by deliberately sacrificing some voice revenue, to gain subscriber accounts.

On a net basis, T-Mobile US gains by adding subscribes, whatever small losses it sustains on lower voice calling volume and revenue.

Strategically, all contestants in the market will earn less revenue from voice over time, as mobile Internet access--not voice or messaging--emerges as the core revenue stream.

That is one reason why Verizon Wireless and AT&T Mobility make unlimited voice and messaging a feature of an access service, at a flat rate and bundled with a subscription.

The variable parts of service for a smartphone account then becomes use of mobile Internet access services.

Strategically, contestants begin to discount and merchandise features that once were core revenue drivers when those features cease to be core revenue drivers.

In the U.S. market, data revenue generated 51 percent of mobile revenues in the fourth quarter of 2013, up from about four percent a decade earlier, according to Chetan Sharma.

Others might say the shift is less pronounced, if text messaging revenues are separated from Internet access revenue. Still, the trend is clear enough.

In Europe, where the trend is most pronounced, a study by the GSMA found that mobile average revenue per user (ARPU) across the 27 European Union (EU27) countries fell by 20 percent between 2007 and 2010, caused primarily by ongoing declines in the average per-minute price for voice calls, which dropped from EUR0.16 to EUR0.14 in the EU27 mobile markets over the period.

The point is that when service providers start to discount and merchandise any particular feature or service, that feature or service no longer is viewed as driving significant future revenue, even when those sources have been crucial in the past.

source: GSMA
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