Larger screened phones result in a higher average revenue per user, according to the market research firm CCS. According to the firm, larger screened handsets prompts users to spend more data. Subscribers who own smartphones with larger displays tend to watch more videos and consume more content compared to those who own handsets with smaller screens. The increase in data consumption could lead to higher revenue, as carriers, especially those who do not offer unlimited plans, can charge subscribers more.
Another way that the larger smartphones can lead to an escalation in average revenue per user is the jump in device sales. Handsets with displays of increased size tend to be more expensive, allowing the carrier to charge more for every device sold. Many carriers have noted that device sales are an important component of their income, with AT&T previously warning that its wireless revenue and profit will be affected by the increasing tendency of customers to hold onto their smartphones longer. Thus, anything that could increase device sales will result in an improvement in the bottom line of these companies. Higher prices may also convince carriers to lengthen the installment contracts they offer to their subscribers from 2 years to 3 years. While it may not directly affect the average revenue per user, the companies may see reduced churn rates, which then improves the overall subscriber numbers.
The carrier industry in the United States is becoming increasingly competitive. With the firms already offering unlimited plans, managers of these companies decided that reducing the average revenue collected per user is important in reducing the churn rate and increase the number of customers. However, these recent efforts have negatively impacted the firm’s bottom line. Nonetheless, there are already companies that are taking advantage of the current situation. Larger carriers, like AT&T and Verizon, are diversifying their business to make them more resilient against the more competitive rivals. On the other hand, T-Mobile has rolled out a new service it dubbed as the DIGITS. This allows users with multiple phones to use the same number across the devices. This is especially important in a period where screen sizes are rising since many consumers still prefer smaller phones on certain occasions.