Report: US Carriers Recording Rising Recurring Revenue

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According to the latest study conducted by the multinational market analysis firm New Street Research (NSR), the largest wireless carriers in the United States are still doing exceptionally well when it comes to making money. More specifically, NSR reports that the US wireless service providers have managed to increase their recurring revenue per customer (RRPC) in recent months. However, that isn't to say that the major players in the country aren't threatened by the fact that the market is about to get a lot more competitive, they're just making the most of it at the moment.

Interestingly enough, NSR opted to base its latest study on the said RRPC metric rather than the more widely accepted average revenue per user (ARPU). The company explained that decision as a necessary reaction to the industrywide trend of replacing handsets subsidies with leasing and installment plans. Namely, after T-Mobile did away with phone subsidies several years ago, its rivals had to follow suit or risk getting left behind. As an indirect consequence of those actions, installment and leasing contracts reduced both the ARPU and RRPC performance for all four major players in the country.

Using this alternative methodology, NSR concluded that the overall revenue from postpaid services is growing in a slow but steady fashion, which naturally reflects on profit margins in a positive manner. To be more specific, the research firm believes that the transition period from device subsidies to alternatives mentioned above is now finally over. So, as the overall market is stabilizing, wireless carriers are starting to record revenues more similar to that from the past when the market was also relatively stable and not susceptible to significant repricings. NSR also predicts this trend will continue for some time and that all four of the largest US carriers will boast significantly increased RRPC in the future.

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Overall, only Verizon and AT&T are facing immediate issues as they need to figure out a way to stop T-Mobile and Sprint from taking away their customers, which they are currently doing even without continually lowering their prices, at least in the grand scale of things. As NSR's analysts noted, while T-Mobile and Sprint are often offering their services at a discount, their share gains are increasing much faster than the discounts themselves. All in all, this complex situation on the market is expected to become even more complicated once cable companies like Comcast enter the wireless market next year.