Pinger: Our ARPU is 64-65 cents per month
LAS VEGAS--Messaging provider Pinger earns an average of roughly 64-65 cents per month from each of its users, primarily from advertising. Greg Woock, Pinger's co-founder and CEO, provided the figure during a discussion here at the CTIA Wireless 2013 trade show about the effect over-the-top messaging providers are having on wireless carriers' traditional voice and messaging businesses.
ARPU, or average revenue per user, is a figure widely used by wireless carriers to provide insight into the status of their finances. According to Strategy Analytics, Verizon Wireless' (NYSE:VZ) ARPU in the first quarter was $54.67, while AT&T Mobility's (NYSE:T) ARPU was $46.89. Of course, as Pinger's Woock pointed out, Pinger doesn't need to build or maintain a wireless network, and therefore it can be profitable with a relatively miniscule ARPU.
And that's where the OTT debate centers: Some wireless carriers have complained that messaging services from the likes of Pinger travel "over the top" of a wireless network, and cut into the voice and messaging revenues provided by wireless carriers but don't contribute to the expense of maintaining that infrastructure. Indeed, researcher Ovum anticipates social messaging apps like Facebook Messenger will cost operators $32.6 billion in 2013, increasing to $86 billion in 2020.
However, Sprint Nextel's (NYSE:S) Kevin McGinnis, VP of product platforms, said that Sprint and other U.S. carriers haven't been much affected by the OTT trend since most U.S. carriers offer unlimited messaging services. Sprint, for example, offers its Simply Everything unlimited calling, texting and data plan for $99 per month.
Further, McGinnis argued that wireless carriers need to continue to innovate in order to compete against OTT providers. He rejected the idea that wireless carriers should only focus on selling reliable connections, instead arguing that wireless carriers should innovate alongside OTT providers in order to provide customers with the best service possible.
"I don't think there's any reason I can't compete in that space," McGinnis said. "We do have to find a way to compete."
And McGinnis said that carriers like Sprint should look to partner wherever possible in order to remain relevant to customers. For example, he pointed to Sprint's 2011 deal to support Google Voice. He said it was a rare example of a wireless carrier giving up direct control over customers' voicemail. McGinnis also pointed to the carrier's Sprint ID service, which allows content providers to sell customized Android user interfaces, as another example of Sprint's innovation.
"We do need to figure out new business models," McGinnis said.
Along those lines, McGinnis, Woock and Ericsson's (NASDAQ:ERIC) Vish Nandlall, the vendor's CTO, offered their reaction to the concept of toll-free data. Carriers including Verizon and AT&T have voiced support for the idea of toll-free data, where a content provider like ESPN would cover the cost of users' data charges to access their content. Indeed, the Wall Street Journal recently reported that ESPN is in talks with a major U.S. carrier for just such a relationship.
McGinnis said that carriers like Sprint would be open to toll-free data business models, though he pointed out that Sprint's customers specifically wouldn't necessarily need subsidized data access since they already have unlimited data services.
Ericsson's Nandlall also noted that some carriers already have the infrastructure in place to effectively offer toll-free data services. He said some carriers have invested in the kinds of real-time billing services that could support subsidized access to specific websites or content sources.
But, interestingly, Pinger's Woock appeared relatively unsupportive of toll-free business models. He said that such models have not worked out in the wired Internet world and would therefore likely not work in wireless.
"If we use the desktop as a proxy, that has not gone well," Woock said. "I don't think that mobile is going to be that fundamentally different."
Special Report: Visit CTIALive for complete CTIA Wireless 2013 coverage
Report: ESPN in talks with U.S. carrier on toll-free data plans
Facebook Messenger to cost operators $32.6B in 2013, firm predicts
Firefox, toll-free data won't cure operators' OTT ills