On 2008-04-29, SMS <scharf.steven@geemail.com> wrote:
> For Q1 CY08:
>
> Verizon added 1.5 million customers, 1.3 million of them postpaid retail
> contract customers. ARPU was $51.40.
>
> AT&T added 1.3 million customers, 705000, of the postpaid retail
> contract customers. So nearly half of their net additions were
> low-profit prepaid and MVNO customers. ARPU was $50.18.

The Verizon number is wrong. AT&T's ARPU was $50.18, but Verizon's
was $50.91. There's a 1.45% difference between those numbers.

You've never really explained why, if Verizon's customer base is
so high quality and high paying while AT&T's customer base has so
many low-revenue customers, that each company's average take from
each customer for service is pretty much identical. Either AT&T's
MVNO customers must produce almost as much revenue as their
retail customers, or AT&T's retail customers must provide more
revenue per user than Verizon's to make up the difference. In
either case the numbers make it clear that there's not a lot of
difference (1.45%) between the average AT&T and average Verizon
customer, at least not a lot which matters to the top line.

> OTOH, AT&T beat Verizon in wireless revenue, $11.8 billion to $11.7
> billion, and much of that is attributable to the higher ARPU from iPhones.

I have no idea how you concluded the iPhone had anything to do with
anything at all. Mathematically speaking the obvious reason is simple:
AT&T and Verizon have almost the same ARPU, but AT&T has more users
so AT&T has more service revenue.

The more interesting question is how Verizon, with the same ARPU as
AT&T and significantly fewer users, has managed to stay so close
to AT&T in terms of overall revenue (in fact this is the first quarter
I remember where AT&T's revenue has exceeded Verizon's). The difference,
of course, is that Verizon's revenue from equipment sales are significantly
higher than AT&T's, about 60% in past quarters though I haven't looked
for the numbers this quarter. At least some of that difference has to
do with the fact that MVNO customers generally produce no equipment revenue
for AT&T, but the remainder probably has a lot to do with Verizon's
snail-like pace at allowing phones from third parties to be used on
their network. Equipment control is a small goldmine for Verizon.

Dennis Ferguson