Despite the relatively mature smartphone market, the majority of U.S. telecom operators were able to sustain year-to-year wireless revenue growth in 4Q22. Though inflation is limiting discretionary spending, operators are withstanding these pressures as wireless connectivity remains essential to most consumer and business customers. However, operators are being impacted by certain customers seeking lower-priced service plans to accommodate their tighter budgets, which is spurring operators to introduce new entry-level service plans, such as Verizon’s Welcome Unlimited plan.
Continued subscriber additions remained a main driver of wireless revenue growth. Connection growth among businesses is a predominant source of subscriber additions as companies are providing employees corporate lines and devices to accommodate hybrid work environments as well for security reasons, such as keeping corporate data and applications separate from employees’ personal devices.
Connected devices are also helping to drive subscriber growth, especially in areas including wearables such as the Apple Watch as well as connected car, which is generating millions of new quarterly connections for AT&T. Fixed wireless access (FWA) has also become a more predominant source of connection growth as T-Mobile’s and Verizon’s FWA services continue to outperform cablecos and other broadband providers in subscriber additions as the cost savings offered by FWA are appealing to customers amid inflationary pressures.
In addition to continued subscriber growth, higher average revenue per user (ARPU) is a significant driver of wireless revenue growth for U.S. operators, as a result of customers migrating to premium unlimited data plans to take advantage of incentives including subscriptions to video and music streaming services, 5G coverage without throttling limits, and increased high-speed mobile hotspot data allotments. ARPU is also benefiting from increasing international roaming revenue as travel activity gradually returns to pre-pandemic levels.
To learn more about the go-to-market and operational strategic shifts of U.S. operators amid inflationary pressures, watch our recent webinar “Competitive Landscape Shifts: Key Trends Impacting the U.S. Wireless Market” for free now