Wireless Business Use: The Overlooked Profit Machine

SUMMARY

Based upon the surveys in several recent reports, In-Stat has found that the conventional wisdom in the wireless industry significantly underestimates the value of mobile business usage. In-Stat has also reported that many user organizations fail to properly manage wireless expenses, particularly when compared to wireline expenses. The implication is that wireless operators should reallocate resources to support mobile business applications. This, in turn, will help the operators' profitability.

Corporate-liable customers produce the majority of profit and individually liable subscribers contribute most of the remaining profit for wireless operators. Converting corporate customers to assume corporate liability is also in their best interests. Whatever the operators' current strategy for attracting mobile business, the profitability of this segment, along with the growth of mobile data applications for business, indicates that devoting more resources to retain these customers is money well-spent.

Failure to address this market has the potential to leave wireless operators vulnerable to the coming wave of new mobile data operators that will serve the rapidly growing mobile data needs of these customers if given the chance.

TABLE OF CONTENTS

In This Update

• Executive Summary
  • Spending on Wireless Services
  • “Invisible” Spending on Business Wireless
  • Mobile Business Revenue is the Majority of Wireless Spending
  • Profitability Implications
  • Implications for Wireless Operators in the US

List of Tables

• Table 1. Average Cost per Minute of Airtime for Corporate-Liable and Individual-Liable Respondents
• Table 2. Quantity of Subscribers and Revenue Associated With US Business User Segments
• Table 3. Monthly Cost per Subscriber Among Publicly Traded US Operators
• Table 4. Contribution Margins from Business User and Pure Consumer Categories
• Table 5. Comparison of Subscriber Numbers and Contribution Margin Percentages
• Table 6. Comparison of Subscriber Numbers and Contribution Margin Percentages With More Conservative Assumptions

List of Figures

• Figure 1. Wireline and Wireless Telecom Spending by US Organizations in 2006 (US$ in Billions)
• Figure 2. Growth Projections for US Corporate Spending on Wireline and Wireless Spending from 2006 to 2011 (US$ in Billions)
• Figure 3. The Reimbursement Methods Used by US Employers for Wireless Services
• Figure 4. Wireline and Wireless Telecom Spending for US Businesses, Including Expensed Wireless Bills (US$ in Billions)
• Figure 5. Wireless Billing and Reimbursement Method by US Businesses by Size of Business
• Figure 6. Value of Direct and "Invisible" Telecommunications Expenses Used by US Business in 2006 (US$ in Billions)
• Figure 7. Business and Consumer Share of US Wireless Telecom Revenue (US$ in Billions)
• Figure 8. Source of Current Wireless Phone Among US Respondents
• Figure 9. Source of US Wireless Industry's Contribution Margin in 2006
• Figure 10. Minutes of Use for Corporate-Liable and Individual-Liable Respondents