2009 north-american-wireless-industry-survey

Change is in the air*
2009 North American Wireless Industry Survey

*connectedthinking

Acknowledgments
The PricewaterhouseCoopers 2009 North American Wireless Industry Survey
was led by Pierre-Alain Sur, PwC’s U.S. wireless industry leader; Shara Slattery;
and Ashley Wright and represents the efforts and ideas of many members
of the firm’s Entertainment, Media and Communications Industry practice.
The principal contributors were Brian Caisman, Seth Claus, Jamal Douglas,
David Enquist, Michael Gibbs, Mariam Harutyunyan, Michelle Mahan, Steve Payette,
Karen Plunkett, Michael Riordan, Dominic Wong, and Jacob Young. PwC especially
thanks the companies that contributed topics and participated in the survey: AT&T
Mobility, Leap Wireless, Metro PCS, Sprint Nextel, T-Mobile USA, U.S. Cellular,
Verizon Wireless, Rogers Wireless, and TELUS Mobility.

Their support of this project and their candid responses are much appreciated.
Together we have created valuable insight into the operations of and the challenges
faced by today’s wireless industry.

About this survey
The PricewaterhouseCoopers 2009 North American Wireless Industry Survey is
an annual publication that covers the financial and operational reporting policies
and practices of wireless telecommunications service providers. The 2009 survey
comprises companies in the United States and Canada. The survey is conducted by
PwC’s Entertainment, Media and Communications Industry practice, which prepares
the survey questions, solicits company participation, and compiles and analyzes the
survey results. The survey period covers year-end 2008 as well as certain information
as of June 30, 2009. Companies participate voluntarily, and individual survey results
are kept confidential by PwC.

PwC has taken reasonable steps to ensure that the information contained in
this publication accurately summarizes the survey responses received from the
participating companies; however, PwC has not performed any procedures to
verify the accuracy of the survey responses. The survey provides a summary
of the participating companies’ financial and operational reporting policies and
practices and does not purport to render accounting guidance or any other type
of professional advice. Should such advice be required, readers should contact
their local PricewaterhouseCoopers office.

PwC’s worldwide office directory is accessible at www.pwc.com.

Table of contents

Executive summary 1

Participating company information 4
Company type and subscriber base 5
Annual service revenue 6
Employee base 6
Sales locations 8
Customer care 9
Licensed spectrum 14
Environmental sustainability 15

Revenue recognition 16
Service contracts and family plans 17
Termination fees and bad-debt expense 18
Prepaid 21
Data services 25
Mobile advertising 28
Wi-Fi data services 28
Customer retention 29
Sales incentives 30
Market development funds and rebates 32
Other revenue activities 33
Revenue assurance 34
Customer billings and payments 36
Handset insurance 40
All-inclusive packages 41

Performance measures 42
Customers/metrics 43
Subscriber costs 52
Data 56
Ring tones 57
Games 58
SMS and premium SMS 58
Phone/BlackBerry-based e-mail and Web access 58
Laptop cards 59
Internet access from handsets 59
Picture revenue 59
Network 60
Long-distance and interconnect expenses 62
Rate plans and billing 63

Property, plant, and equipment 66
Capital expenditure reporting 67
Technology usage 70
Capitalization policies 74
Capitalized labor 76
Site acquisition costs 78
Asset impairments and fair value 79
Business combinations 80
Asset tracking 82
Asset useful lives 85
Data network 102
Taxes and tax-useful lives 105
Colocation 109
Asset retirement obligations 110

Executive summary
We are pleased to publish the 13th annual PricewaterhouseCoopers
Wireless Industry Survey. This survey is a continuation of the
11 years of the North American Survey and the 2008 Global Wireless
Industry Survey. Based on the candid feedback of participating
companies, the survey for 2009 focuses on North America only, and
comparisons to the 2008 survey responses have been recast as
necessary to reflect comparable results.
Via the survey, PricewaterhouseCoopers continues to strive to help
companies better understand 1) industry performance measures
and their evolution over time 2) the policies and procedures utilized
by responding companies, and 3) the comparability of financial
statements within the industry. We also have the goals of addressing
general financial accounting and reporting practices in the industry
and of identifying emerging trends or issues related to technology
and service offerings.
The Wireless Industry Survey has become a resource for many
wireless communication industry executives; it has evolved with the
changing businesses and trends in the industry; and it is based on
feedback received from participating companies. This Executive
summary provides highlights of this year’s survey results. As in prior
years, we hope you find this year’s survey informative, relevant, and
thought provoking.
The PricewaterhouseCoopers 2009 North American Wireless
Industry Survey results reflect the participation of the seven
largest U.S. wireless operators, plus the two largest Canadian
wireless companies. Because of the breadth of coverage and
participation,we believe the survey provides the most representative
summary of industry accounting and reporting policies and practices
available for North America. Compared with the 18 participating
carriers that participated in the Wireless Industry Survey in the
early 2000s, the decline in the number of participating carriers is
consistent with consolidation in the industry.

PricewaterhouseCoopers 2009 North American Wireless Industry Survey | 1

We have highlighted throughout the survey the industry’s important
changes and trends, including two very notable milestones for the
wireless market in the United States and Canada. First, there was a
dramatic advance in terms of technology evolution—specifically, the
evolution of the smart phone. Second, mobile penetration reached
a mass-market saturation level. It is the combination of those
two events that triggered a significant transition in the industry’s
competitive landscape. Where the battle once focused on customer
experience, increasingly the emphasis is now shifting to price. We
see this with both high- and low-end providers. Based on a new
paradigm, we believe management must rethink a key component of
its business strategy: the definition of a profitable customer and the
resulting implications for its business model and cost structure.
Following are a few highlights from this year’s results that cover 2008
year-end and certain 2009 metrics.

Revenue and performance measures
As the economy continued in a downturn throughout 2008 and into
2009, the communications industry experienced both a continuous
shift toward wireless substitution and increases in prepaid plans.
On average, prepaid minutes of use have increased more than
147% in the past four years, from 270 minutes in 2006 to 667 in
the 2009 results. In addition, prepaid plans continue to represent a
significant and growing portion of revenue: on average, 26.1% of
total service revenue for all responding companies. Finally, during
2009 the historical postpaid carriers put greater focus on the prepaid
segment. From an operational perspective, protecting the base by
focusing on subscriber retention remained critical. As overall market
penetration rates have slowed, retention costs continue to increase
year over year. In such an environment, evaluations of customer
profitability—to ensure that investments and retention provide
adequate returns—become increasingly important and challenging.
And the competition is fierce.

2 | Change is in the air

Smart phones (mobile phones offering advanced capabilities with
PC-like functionality) are becoming a larger part of companies’
sales and have significant higher average revenue per user than
traditional wireless phones do. As of June 30, 2009, on average,
21% of all sales are smart phones, and an average of 12% of
overall subscribers use smart phones. The average revenue per
user for smart phones is $74 compared with total postpaid average
revenue of $54.
As companies continue to look for ways to reduce costs and also
exert an impact on environmental issues, electronic payments or
e-bills are becoming more significant. The average percentage of
postpaid subscribers receiving paper invoices decreased from 81%
in the 2008 Global Wireless Industry Survey to 72% in 2009, and the
average percentage of subscribers that received electronic invoices
increased from 6% in the 2008 Global Wireless Industry Survey to
14% in 2009. In addition, companies have increased their targeted
e-bill penetration rates: the average rate for 2009 subscribers
increased from 12% in the 2008 Global Wireless Industry Survey to
19% in the current year.

Property, plant, and equipment
Given continued demand for new products and services—
especially in the area of data, the importance of service quality,
and the nascent development toward fourth-generation (4G)
technologies—companies have continued to invest despite the
difficult economic environment. On average, capital expenditures
as a percentage of service revenue were 21.5% in 2009 compared
with 18% in the 2008 Global Wireless Industry Survey. Half of the
responding companies indicated that more than 75% of cell sites
use third-generation technology. Companies are also beginning to
migrate to 4G technology, with one company already using it; two
respondents expecting to begin utilizing it in 2010; and two more
expecting to by 2011. Asset tracking continues to be an area in
which companies spend time and resources. In the 2009 survey,
76% of respondents indicated they use automated tracking systems
with bar code scanning. Compared with the 2008 Global Wireless
Industry Survey—in which 75% of respondents had completed an
inventory of network assets within the previous 12 months—only
57% of this year’s respondents completed an inventory within the
past 12 months.


Participating company
information
The following pages provide the demographics and general
corporate data and structure of the responding carriers. As Listing of companies
applicable, any information related to the 2008 Global Wireless that participated in
the 2009 Wireless
Industry Survey has been updated to remove the impacts of the Industry Survey
global carriers as presented in the prior-year’s survey.
United States
AT&T Mobility
Leap Wireless
MetroPCS
The average customer care activity via Internet Sprint Nextel
transactions is 9% for postpaid and 5% for T-Mobile USA
U.S. Cellular
prepaid subscribers. Verizon Wireless

Canada
Rogers Wireless
TELUS Mobility


Company type and subscriber base
All of the companies surveyed reported that they were required to file interim and/or
annual financial statements—either individually or through their parent companies—
because they are listed on stock exchanges. In addition, all of the companies report
financial statements or financial information externally on Web sites or via press
releases. The following chart depicts the various stock exchanges on which the
responding companies are listed.

Stock exchange distribution

11%
22%

Toronto Stock Exchange
67% New York Stock Exchange
NASDAQ

The majority of responding companies prepare their financial statements primarily
under U.S. and Canadian generally accepted accounting principles (GAAP), with one
respondent preparing financial statements under International Financial Reporting
Standards (IFRS). The following chart shows the number of responding companies that
prepare their financial statements according to the respective accounting principles.

Accounting principle followed
US GAAP 6
Canadian GAAP 2
IFRS 1
Number of respondents

The following chart shows the responding companies’ reported subscribers
as of June 30, 2009.

Subscribers as of June 30, 2009

11%
22%

2.5 million – 5.0 million
22% 45%
Greater than 50.0 million

The industry continues to experience subscriber growth as more people substitute
wireless devices for traditional wireline service. Wireless industry service revenue grew
6.3% in the United States and 10.1% in Canada, while the number of subscribers grew
by 5.4% in the United States and 7.1% in Canada, according to Pyramid Research.


Participating company information

Annual service revenue
The following chart illustrates the responding companies’ service revenue reported as
of December 31, 2008, which was the most recently ended fiscal year. The average
service revenue was $29.4 billion for carriers with revenue greater than $5.0 billion and
was $3.0 billion for carriers with revenue less than $5.0 billion.

Annual service revenue

33%
45%

$1.0 billion – $5.0 billion
22% $5.1 billion – $20.0 billion
Greater than $20.0 billion

Employee base
Eighty-nine percent (89%) of the responding companies reported operating their
companies on a centralized basis (whereby a single headquarters location performs
the accounting/finance function for the entire organization) as opposed to a
decentralized basis (whereby multiple business units or segments perform separate
accounting or finance functions that are consolidated by a headquarters office).

The following chart represents the number of full-time employees as of June 30, 2009,
as reported by the responding companies.

Full-time employees

22% 22%

1,000 – 5,000 employees
5,001 – 10,000 employees
22% 22%
10,001 – 20,000 employees
12% 20,001 – 50,000 employees
Greater than 50,000 employees

Carriers with revenue greater than $5.0 billion had more than 10,000 full-time
employees and averaged 50,082 employees; carriers with revenue less than
$5.0 billion had 10,000 or fewer full-time employees and averaged 5,844 employees.


The following charts depict the number of full-time employees in each functional
category as of June 30, 2009. The responding companies were split between carriers
with revenue greater than $5.0 billion and carriers with revenue less than $5.0 billion.

Average number of employees per functional position
2,224
Retail employees
18,041
1,935
Customer care
16,858
634
Network/engineering
5,676
661
Information technology
1,932
Average number of employees
Carriers with revenue < $5.0 billion
Carriers with revenue > $5.0 billion

Average number of employees per functional accounting and finance position
19
Financial planning and analysis
141
12
Internal audit
81
17
Income and nonincome tax
75
13
Commission accounting
62
11
Inventory accounting
39
24
Revenue accounting
33
11
Property accounting
22
10
Payroll accounting
21
Average number of employees
Carriers with revenue < $5.0 billion
Carriers with revenue > $5.0 billion



Sales locations
All but three of the responding companies reported using company-owned retail stores
and kiosk locations to sell to and provide services for customers. The following chart
depicts how many company-owned retail stores and kiosk locations were reported by
the responding companies.

Company-owned retail stores and kiosk locations

26%
37%

100 – 200 retail stores and kiosk locations
37% 201 – 450 retail stores and kiosk locations
1,000 – 2,500 retail stores and kiosk locations

No responses were received in the less-than-100 and 451–999 categories.

The average number of company-owned retail stores and kiosk locations increased
over the prior year from 1,430 to 1,500 for carriers with revenue greater than $5.0
billion. Carriers with revenue less than $5.0 billion experienced a jump from 189 to 274
in the current year.
The following charts depict the number of reseller retail stores (third-party companies)
and branded franchise locations that sell each carrier’s services.

Reseller retail stores

25% 25%

13% Less than 1,500 reseller retail stores
4,001 – 4,500 reseller retail stores
37% 5,001 – 7,500 reseller retail stores
Greater than 25,000 reseller retail stores

No responses were received in the 1,501–4,000, 4,501–5,000, and 7,501–25,000 categories.

The average number of reseller retail stores (third-party companies) that sell services
for carriers with revenue greater than $5.0 billion is 71,628, up from 53,034 as reported
in the 2008 Global Wireless Industry Survey. For carriers with revenue less than $5.0
billion, the number of reseller stores rose to 2,983 from 2,301 in 2008.


Branded franchise locations

12%
25%

25%
Less than 1,000 branded franchise locations
1,001 – 2,000 branded franchise locations
38% 3,501 – 4,000 branded franchise locations
7,001 – 7,500 branded franchise locations

No responses were received in the 2,001–3,500 and 4,001–7,000 categories.

Branded franchise locations represent a branded store that is independently owned
by a third party. The average number of branded franchise locations that sell services
for carriers with revenue greater than $5.0 billion is 3,898, compared with 2,782 in
the 2008 Global Wireless Industry Survey. For carriers with revenue less than $5.0
billion, that number is up to 1,322, compared with 535 in the 2008 Global Wireless
Industry Survey.

Customer care
The following charts depict the responding carriers’ percentages of customer care
activity provided for postpaid and prepaid subscribers, categorized by the source.

Customer care activity via Internet transactions (postpaid)

20%

40%

No customer care activity via Internet
40%
1% – 10% of customer care activity via Internet

No responses were received in the 21%–100% category.

Customer care activity via Internet transactions (prepaid)

13%

25%
62%
No customer care activity via Internet




The average customer care activity via Internet transactions is 9% for postpaid
subscribers and 5% for prepaid subscribers. No significant variances existed between
carriers with revenue greater than $5.0 billion and carriers with revenue less than
$5.0 billion related to Internet transactions. In the 2008 Global Wireless Industry
Survey, the average percentage of all customer care activity (postpaid and prepaid)
performed via Internet transactions was 23% by carriers with revenue greater than
$5.0 billion and 8% for carriers with revenue less than $5.0 billion.

Customer care activity via interactive voice response (IVR) (postpaid)

40% 40%

1% – 10% of customer care activity via IVR
20% 11% – 25% of customer care activity via IVR

No responses were received in the 26%–50% and 76%–100% categories.

Customer care activity via interactive voice response (IVR) (prepaid)

13%
25%

25%
37% 51% – 75% of customer care activity via IVR


Customer care activity via live customer service representative (postpaid)

40% 40%

26% – 50% of customer care activity via live rep
20% 51% – 75% of customer care activity via live rep



Customer care activity via live customer service representative (prepaid)

37% 37%


26% 26% – 50% of customer care activity via live rep


The average customer care activity via interactive voice recognition (IVR) is 29% for
postpaid customers and 55% for prepaid customers. Live customer service via a
customer service representative is utilized 62% of the time for postpaid subscribers
and 37% for prepaid subscribers. In addition, prepaid customers utilize their handsets
to complete 3% of customer care activity. Responding companies indicated that on
average, calls are transferred only once before an issue or inquiry gets resolved.
Carriers with revenue greater than $5.0 billion completed 26% of customer service
via IVR for postpaid and 66% for prepaid subscribers. Live customer service
averaged 66% for postpaid and 30% for prepaid for carriers with revenue greater
than $5.0 billion. Carriers with revenue less than $5.0 billion completed 34% of
customer service via IVR for postpaid and 44% for prepaid subscribers. Live customer
service averaged 56% for postpaid and 34% for prepaid subscribers for carriers with
revenue less than $5.0 billion.
In the 2008 Global Wireless Industry Survey, live customer service via a customer
service representative was utilized the most, at 55%, and carriers with revenue greater
than $5.0 billion used IVR for 25% of all customer care activity and used live customer
service representatives approximately 50% of the time. Carriers with revenue less than
$5.0 billion in the 2008 Global Wireless Industry Survey had more live interaction (60%
of all transactions) for customer care activity and completed 29% of all transactions
through IVR.

The following chart shows the types of activities available to subscribers over
the Internet.

Available Internet activities

Equipment purchases 100%

Customer payments 100%

Billing inquiries, excluding 86%
customer payments
Technical issues related 71%
to device service

Personal information changes 71%

Changes to service plans 71%
Percentage of respondents

Chart sums to greater than 100% because multiple responses were allowed.



We asked companies to indicate the level of customer care activities that are
outsourced to third parties. All of the responding companies outsource at least a
portion of their customer care call volume. We noted that carriers were generally
inclined to outsource more of their prepaid call volume than their postpaid call volume.
All of the responding companies outsource some percentage of postpaid, and 67% of
the companies outsource all of their customer care activity for prepaid.

In the 2008 Global Wireless Industry Survey, 15% of the responding companies
outsourced all of their customer care call volume, while an additional 15% did
not outsource any of their customer care call volume. The remaining 70% of the
responding carriers outsourced a portion of their customer care call volume.

The following charts depict the percentage of outsourced call volume for both postpaid
and prepaid subscribers.

Outsourced customer care activity (postpaid)

40% 40%

0% – 25% outsourced
20% 26% – 49% outsourced


Outsourced customer care activity (prepaid)

25%

75%
100% outsourced



There continues to be interest in the outsourcing of customer care activity to
international locations. In the 2008 Global Wireless Industry Survey, responding
companies indicated that in total (prepaid and postpaid), an average of 37% of
customer care activity was outsourced internationally. The following chart shows the
percentage of outsourced volume that is handled domestically (primary country of
operation) versus internationally.

Domestic versus international outsourcing
Postpaid average 81% 19%
Prepaid average 40% 60%
Domestic
International

Outsourced locations for postpaid customer care activities include Guatemala, India,
Mexico, Panama, and the Philippines. In addition to the postpaid locations, prepaid
customer care activity is also outsourced to the Dominican Republic, Nicaragua,
and South Africa.

The following chart depicts the number of respondents that outsource a portion of their
primary accounting functions. For those functions that are outsourced, the average
percentage of the responding company’s activity that is outsourced is indicated.

Outsourced accounting functions

Rebate processing
8 89%
1
Inventory management
7 75%
2
Sales and use taxes
6 48%
2
Remittance processing
6 46%
2
Income taxes
6 36%
2
Accounts receivable
6 35%
4
Payroll processing
4 38%
3
Information technology
4 27%
5
Property taxes
3 53%
5
Accounts payable
3 37%
6
Internal audit
1 40%
7
Payment processing
1 8%
No outsourcing
Function outsourced



Licensed spectrum
The responding companies own and use licenses primarily in the cellular
(~850 megahertz [MHz]) and personal communications services (PCS) (~1.9 gigahertz
[GHz]) categories to provide service. A large number of responding companies also
own advanced wireless services (AWS) spectrum. The following chart shows the
number of companies that own and use each of the reported license types.

Licensed spectrum
9
PCS (~1.9 GHz)
9

8
AWS (1,700 MHz)
3

7
AWS (2,100 MHz)
2

6
Cellular (~850 MHz)
6

Federal Communications 4
Commission Cellular (~700 MHz) 1

Web log-in service communication 2
services (~2.3 GHz)

Specialized mobile radio 2
services (~800/900 MHz) 2

1
Non-US wireless licenses
1
Own
Use

Chart sums to greater than the number of responding carriers because multiple responses were allowed.

In addition, broadband wireless spectrum (2.5 GHz and 3.5 GHz) is owned and used
by one carrier, and certain AWS spectrum (1,700 MHz and 2,100 MHz) is owned by
one carrier each but not used by any carriers.


Environmental sustainability
Given the growth in environmental responsibility by individual companies and the
increase in environmental concerns by consumers, we asked companies about their
environmental responsibility programs. Seventy-five percent (75%) of the responding
companies indicated that the responsibility for environmental performance rests with
a C-level executive. One company assigned responsibility to a functional organization,
and one had no one specifically assigned.

The surveyed companies were asked several questions related to their views on
environmental practices. The companies were asked to respond on a scale of 1 to 5,
with 1 being “Strongly agree” and 5 being “Strongly disagree.” The following chart
represents the average response received for each question in 2009, compared with
the 2008 Global Wireless Industry Survey.

Environmental views

Green efforts are more of a fad than they are an enduring 3.9
transformation for our company and our industry 4.4
Our industry has a moral responsibility
to help consumers change their own behaviors 2.2
(through editorial, effective programming, and advertising) 2.6
Investors and stakeholders will increasingly
reward companies with above-average 2.2
performance on sustainability issues 2.5

These initiatives make a positive contribution to the 1.4
workplace, employee morale, recruitment, and retention 1.8

We can achieve cost savings by implementing 1.4
sound environmental practices 1.8

We must demonstrate progress on our environmental 1.7
records to continue to attract and retain subscribers 2.1

These efforts are valuable to our brand, 1.6
to who we are as a company, and to our subscribers 2.0

The adoption of environmentally friendly practices 1.3
can drive stronger corporate performance 1.8
Average response
1. Strongly agree 4. Disagree 2008 average
2. Agree 5. Strongly disagree
2009 average
3. Neutral

Sixty-three percent (63%) of the responding companies reported their performance on
environmental or social issues to the public through either triple-bottom-line reporting
or another discretionary report, such as a corporate responsibility report. Another 29%
of the respondents indicated that they plan to report environmental performance in
the future.

All of the responding companies reported supporting existing programs to recycle
mobile phones/accessories and reduce their environmental impact. The programs
include in-store collection, donating proceeds to local charities, planting trees,
and customer account credits. Eighty-eight percent (88%) of the respondents
reported monitoring their carbon footprints to determine ways of reducing
environmental impact.


Revenue recognition
The following pages cover wireless company practices in the area
of revenue recognition.

On average prepaid minutes of use have increased
more than 147% in the past four years.


Service contracts and family plans
Of the responding companies, 78% indicated they have postpaid service contracts
with their subscribers. Of the nine total respondents, six offer one-year contracts,
six offer two-year contracts, and three offer three-year contracts.

The following chart illustrates the responding companies’ terms of postpaid service
contracts and the approximate percentage of subscribers on each contract term.

Percentage of subscriber base by contract term
2%
Carrier E 10% 60% 28%
1%
Carrier D 9% 76% 14%

Carrier C 11% 72% 17%
1% 1%
Carrier B 77% 21%
3% 1% 1%
Carrier A 79% 16%
Percentage of subscribers
One year Out of contract
Two years Other
Three years

Responses in the other category include primarily month to month.

An increasing number of companies are offering family plans to their customers.
Seventy-eight percent (78%) of the responding companies offer family plans to their
postpaid subscribers, while only 33% offer family plans to prepaid subscribers. The
following chart shows the percentage of postpaid subscribers who are enrolled in
family plans compared with the 2008 Global Wireless Industry Survey.

Percentage of postpaid subscribers on family plans

Greater than 75%
17%
44%
51% – 75%
33%
12%
26% – 50%
17%
44%
Less than 25%
33%
2008
2009

No responses were received in the greater-than-75% category in 2008.

Of the responding companies that offer family plans, 29% indicated that family plans
average two subscribers per plan, compared with 45% in the 2008 Global Wireless
Industry Survey; 71% indicated that family plans average three subscribers per plan
compared with 45% in the 2008 Global Wireless Industry Survey.


Revenue recognition

The following chart illustrates the average postpaid monthly revenue per user for
subscribers enrolled in family plans. Compared with the 2008 Global Wireless Industry
Survey, monthly revenue per user for family plan subscribers appears to be decreasing.

Sixty-six percent (66%) of respondents said average revenue per family plan
subscriber ranged from $41 to $50. In the 2008 Global Wireless Industry Survey, 62%
cited a higher average revenue range for family plans, from $51 to $60.

Average monthly family plan subscriber revenue

17% 17%

$21 — $40
$41 — $50
66%
$51 — $60

In order to add subscribers to family plans, many of the respondent companies charge
for each additional subscriber enrolled. Seventy-one percent (71%) of the respondents
charge $10 or less per additional subscriber on family plans; the remaining 29%
charge $10.01 to $20.00.

Termination fees and bad-debt expense
The following chart illustrates how responding companies charge contract termination
fees and how strictly the companies bill and enforce the collection of contract
termination fees or early-disconnect fees. Compared with the 2008 Global Wireless
Industry Survey there has been a slight increase in the number of carriers that charge
termination fees or early-disconnect fees.

Contract termination or early-disconnect fees
2008 77% 23%
2009 86% 14%
Percentage of subscribers
Charge somewhat (most early-termination fees
are billed, and most have to pay except in certain
situations, e.g., close to the end of the contract
term, waived for high-value subscribers)
Charge rarely or not at all

Five companies responded that contract termination fees or early-disconnect fees
are prorated over the lives of contracts. Among them, the five companies use several
different methods to determine prorated amounts. Some prorate on a straight-line
basis, while others prorate per month down to a minimum fee.


We also asked the responding companies to comment on their success in collecting
contract termination fees or early-disconnect fees. As indicated in the following charts,
the collection rates on such fees vary drastically depending on whether the customer
has voluntarily terminated service or whether service has been involuntarily terminated
by the company. Eighty percent (80%) of the 2009 responding companies are
collecting approximately 50% or more of contract termination fees related to voluntary
terminations, which is an approximately 40% increase compared with the 2008 Global
Wireless Industry Survey.

Collection rates: Voluntary termination fees
10%
Greater than 75% 8%
40%

30%
51% – 75% 33%
40%

30%
26% – 50% 18%

20%
10% – 25% 33%
20%

10%
Less than 10% 8%

2007
2008
2009

Collection rates: Involuntary termination fees

51% – 75% 8%

20%
26% – 50% 17%

20%
10% – 25% 42%
50%

60%
Less than 10% 33%
50%
2007
2008
2009


Revenue recognition

Compared with the 2008 Global Wireless Industry Survey, collection rates related to
involuntary termination fees have decreased significantly. The decrease in collection
rates correlates with the economic challenges faced in late 2008 and 2009.

The following charts illustrate the responding companies’ average charges for
voluntary and involuntary early-termination fees for postpaid subscribers.

Average charges for voluntary early-termination fees
Greater than $125 20%
$101 – $125 20%
$75 – $100 40%
Less than $75 20%

Average charges for involuntary early-termination fees
$301 – $400 20%
$201 – $300 20%
$101 – $200 60%

The responding companies use several different methods to record revenue related to
termination fees. The results are consistent with the 2008 Global Wireless Industry
Survey. The following chart illustrates what percentage of companies uses each type
of method identified.

Revenue recognition of early contract termination or early-disconnect fees

Record as revenue only the portion of the billed
17% termination fee that is expected to be collected, and
record any additional bad-debt expense against
this amount; represents net reporting of revenue
Record 100% of billed termination fee as service
17% revenue, and record bad-debt expense (through
the company's allowance method); represents
66% gross reporting of revenue
Recognize no revenue until amount billed is
collected (no bad-debt expense is ever recorded);
represents reporting revenue on a cash basis


The following chart illustrates bad-debt expense related to postpaid receivables as a
percentage of total postpaid revenues. The average of responses was 1.8%, which is
consistent with 2008 Global Wireless Industry Survey responses.

Postpaid bad-debt expense
10%
3.01% – 4.00%

20%
2.51% – 3.00%

10%
2.01% – 2.50%
40%
20%
1.51% – 2.00%
40%
10%
1.01% – 1.50%
20%
30%
1.00% or less

2008
2009

Prepaid
All of the responding companies offer customers the opportunity to pay for service in
advance. The following chart illustrates the percentage of the responding companies’
total subscribers who are prepaid subscribers.

Percentage of prepaid subscribers
1
100%
2
1
80% – 90%

6
11% – 25%
3
5
10% or less
4
2008
2009


For companies with revenue greater than $5.0 billion, the average response of the
percentage of prepaid subscribers as a percentage of total subscribers was 11%
compared with 12% in the 2008 Global Wireless Industry Survey. For companies with
revenue less than $5.0 billion, the average response of the percentage of prepaid
subscribers as a percentage of total subscribers was 56% compared with 36% in the
2008 Global Wireless Industry Survey.


Revenue recognition

The average prepaid subscriber life for responding companies is 18 months. The
following chart represents the average prepaid subscriber life for the current year
compared with the 2008 Global Wireless Industry Survey.

Average prepaid subscriber life
7
10 – 15 months
5
2
16 – 20 months
1
1
21 – 25 months

26 – 30 months
1
3
31 – 35 months
1
2008
2009

No responses were received in the less-than-10-months category.

For companies with revenue greater than $5.0 billion, the average prepaid subscriber
life was 17 months in 2009 compared with 18 months in the 2008 Global Wireless
Industry Survey. For companies with revenue less than $5.0 billion, the average
prepaid subscriber life was 19 months compared with 20 months in the 2008 Global

The following chart illustrates the average expiration periods for cards that have been
activated for the responding companies.

Expiration periods

11%

26%

63%
1- to 2-month expiration
3- to 4-month expiration
12-month expiration

No responses were received in the 5- to 11-month category.

Of the responding companies, 43% have expiration periods for cards if they have not
been activated.


The following chart illustrates the average monthly minutes of use (MOU) per prepaid
subscriber for the responding companies.

Average monthly MOU per prepaid subscriber
18%
Less than 100 minutes
11%
64%
100 – 500 minutes
45%
18%
501 – 1,000 minutes
11%

1,001 – 1,500 minutes
22%

Greater than 1,500 minutes
11%
2008
2009

Companies with revenue greater than $5.0 billion reported an average prepaid MOU
of 537 minutes compared with 362 minutes in the 2008 Global Wireless Industry
Survey, and companies with revenue less than $5.0 billion reported average prepaid
MOU of 830 minutes compared with 350 minutes in the 2008 Global Wireless
Industry Survey.

The overall MOU for prepaid has increased 147% in four years.

Average prepaid MOU trend

667

356
320
270

2006 2007 2008 2009


Revenue recognition

Of the responding companies, 56% offer unlimited voice prepaid plans. Of those
companies, 64% of their prepaid customers participate in the unlimited voice plans,
and the average monthly MOU is 1,181. The following chart illustrates the average fee
charged for an unlimited voice prepaid plan.

Average fee for an unlimited voice prepaid plan
$50.01 – $55.00 40%
$40.01 – $45.00 40%
$36.00 – $40.00 20%

No responses were received in the $45.01–$50.00 category.

The following chart represents prepaid revenues as a percentage of total revenues for
the responding companies. The average prepaid revenue as a percentage of total
revenues for companies with revenue greater than $5.0 billion is 5.3% compared with
11.7% in the 2008 Global Wireless Industry Survey; for companies with revenue less
than $5.0 billion, prepaid revenue increased to 52.3% from 36.1% in the 2008 Wireless
Industry Survey.

Prepaid revenue as a percentage of total revenues

2
91% – 100%
2
3
6% – 10%
3
8
5% or less
4
2008
2009



Data services
Data services continues to be an area of focus, as most of the responding companies
are seeking opportunities to grow revenue. The following charts illustrates the
percentage of responding companies’ total service revenues—excluding short
message services (SMS)/text—generated by data services, compared with the 2008
Global Wireless Industry Survey for postpaid and prepaid.

Percentage of service revenues generated by postpaid data services

20.1% – 25.0%
1

15.1% – 20.0%
1
3
10.1% – 15.0%
4
6
5.1% – 10.0%
1

0.0% – 5.0%
1
2008
2009

Percentage of service revenues generated by prepaid data services
4
5.1% – 10.0%
4
6
0.0% – 5.0%
3
2008
2009


Revenue recognition

The following chart indicates the monthly contribution of data services, excluding
SMS/text to total, prepaid, and postpaid average revenue per user (ARPU). Compared
with the 2008 Global Wireless Industry Survey responses, the contribution of data
services—excluding SMS/text—to ARPU has increased. Current-year responses
included five carriers that indicated that data services—excluding SMS/text—have
contributed more than $8 to ARPU compared with $0 in the 2008 Global Wireless
Industry Survey.

Data services’—excluding SMS/text’s—effect on ARPU
56%
Greater than $8.00 25%
56%

11%
$6.01 – $8.00
11%

22%
$4.01 – $6.00
11%

11%
$0.01 – $2.00 75%
22%
Total ARPU per user
Prepaid ARPU per user
Postpaid ARPU per user

No responses were received in the $2.01–$4.00 category.

The responding companies reported that approximately 60% of their postpaid
subscribers use SMS/text, while 55% of their prepaid customers use SMS/text.


The following chart illustrates the percentage of responding companies’ total data
service revenues generated by SMS/text services. Overall, SMS/text services are
becoming a greater percentage of total service revenues. In the current year, two
respondents indicated that SMS/text services constituted 10% to 15% of postpaid
revenues compared with 0% in the 2008 Global Wireless Industry Survey.

Percentage of service revenues generated by postpaid and prepaid data services
1
Greater than 15.0%

3
10.1% – 15.0%
2
1
5.1% – 10.0%
4
1
0.0% – 5.0%
1
Prepaid
Postpaid

The following chart indicates the monthly contribution of SMS/text services to total,
prepaid, and postpaid ARPU.

SMS/text’s effect on ARPU
14%
$5.01 – $7.50
17%
57%
$2.51 – $5.00 50%
66%
29%
$0.00 – $2.50 50%
17%
Monthly ARPU per SMS/text user
Monthly prepaid ARPU per SMS/text user
Monthly postpaid ARPU per SMS/text user

Of the responding companies, 56% indicated they charge for incoming calls and
text messaging.


Revenue recognition

All of the respondents’ subscribers can access third-party content that the company
does not source through their handsets (e.g., through a short-code SMS/text, m-sites,
or a premium rate). The following chart illustrates how the respondents account for the
revenue share payment made to the third-party content provider.

Third-party content

22%
33%

12%
Reduction of revenue
Cost of service

33% Operating expense other than cost of service
Other

Mobile advertising
We asked the responding companies whether they include any nonsubscriber revenue
in calculating average revenue per user (e.g., roaming revenue, wholesale revenue, and
advertising revenue). Eighty-eight percent (88%) of the responding companies include
other nonsubscriber revenues in their ARPU, which is consistent with the 2008 Global
Wireless Industry Survey of 85%. Eighty-six percent (86%) of those carriers reported
that they include roaming revenues.

Of the responding companies, 75% record revenue related to mobile advertising.
Sixty-seven percent (67%) of the respondents indicated they recognize the revenue
by using the gross method; the remaining 33% indicated they use the net method.

Wi-Fi data services
Wi-Fi hot spots and wireless broadband access cards are common in today’s
marketplace. Of the responding companies, 44% offer Wi-Fi hot spots in public
locations such as airports, coffee houses, hotels, and offices compared with 62%
in the 2008 Global Wireless Industry Survey. One hundred percent (100%) of the
companies that offer hot-spot services and pay the hot-spot location a portion of the
fee billed to the customer said they account for those fees as operating expenses.

Of the responding companies, 89% provide wireless broadband access through
personal computer cards, which is consistent with the 92% in the 2008 Global


Customer retention
Companies continue to focus on retaining current customers because overall market
penetration rates have slowed. Accordingly, retention-related activities have increased
in recent years. The following chart illustrates the percentage that retention-related
costs increased for the responding companies.

All responding companies expense retention costs.

Increase in subscriber-retention-related costs
10%
Greater than 50%
29%
10%
31% – 40%

30%
21% – 30%
43%
30%
11% – 20%
14%
20%
0% – 10%
14%
2006 – 2007
2007 – 2008

No responses were received in the 41%–50% category and no responses were received in the 31%–40%
category in 2007–2008.

Subsidies offered on handset upgrades to retain current customers can be a significant
component of customer retention costs. The range of subsidy costs per handset
upgrade reported by the responding companies is presented in the following chart.

Average handset subsidy for customer retention
8%
Greater than $250

8%
$176 – $200
24%
19%
$151 – $175
24%
19%
$126 – $150
24%
8%
$76 – $100

19%
$51 – $75
14%
19%
Less than $50
14%
2008
2009

No responses were received in the $101–$125 category and no responses were received in the $76–$100 or
greater-than-$250 categories in 2009.


Revenue recognition

Sales incentives
Many of the responding companies offer significant subsidies on handsets to attract
new customers. The following chart represents the range of average handset subsidies
the respondents offer to all new customers, as compared with the 2008 Global

Average new customer handset subsidy
8%
Greater than $200

8%
$176 – $200
25%
17%
$126 – $150

17%
$101 – $125
50%
8%
$76 – $100
25%
17%
$51 – $75

25%
Less than $50

2008
2009

No responses were received in the $151–$175 category. In addition, no responses were received in the
less-than-$50, $51–$75, $126–$150 and greater-than-$250 categories in 2009.


The following charts illustrate when companies allow subsidies to existing customers
for a new handset under both one- and two-year contracts.

Postpaid customer eligibility to receive retention subsidy
for new handset (one-year contract)

17% 17%

17% One month before contract expiration
Two months before contract expiration
32%
Three months before contract expiration
17% Only upon expiration of current contract
Other (dependent on rate plan and tenure)

Postpaid customer eligibility to receive retention subsidy
for new handset (two-year contract)

29% 29%

Two months before contract expiration
13% Six months before contract expiration
29% Twelve months before contract expiration
Other (dependent on rate plan and tenure)

We also asked the responding companies to comment on how they account for
demonstration unit handsets, personal digital assistants, and smart phones that are
available in retail stores as floor models. The following chart shows how the costs
are recorded.

Accounting for demonstration unit handsets (floor models)

11%
22%

Cost of goods sold
67% Marketing/sales expense
General and administrative


Revenue recognition

Market development funds and rebates
Of the responding companies that receive marketing development funds from their
vendors, 78% classify these receipts as contra-expense.

The following chart illustrates the incentives and services offered as customer
subsidies by the respondents.

New customer incentives and services offered

Instant rebate (cash based) 9

Free goods (accessories, etc.) 8
Mail-in or Internet-based
rebate (cash based) 8

Waive activation fees 7
Free services 6
(free minutes of service)
Other 4

In-store gifts 3

Chart sums to greater than the number of responding companies because multiple responses were allowed.

Many companies use mail-in rebates as a way of attracting new customers to buy
their handsets. Of the responding companies, 88% offer mail-in rebates to their
postpaid customers, while 56% offer mail-in rebates to their prepaid customers.
Of the companies that offer mail-in rebates, all indicated that they use a third-party
provider to process mail-in-rebate programs.

Rebate requirements vary widely among the responding companies; however, most
respondents require that customers return the receipt, rebate redemption form, and
UPC code. Other companies require a packing slip and a copy of the customer’s bill.

The following graph illustrates the dollar value of instant rebates offered.

Dollar value of instant rebates offered
Greater than $100 5
$76 – $100 6
$51 – $75 6
$30 – $50 8
Less than $30 6



Seventy-eight percent (78%) of the responding companies team with their handset
and accessory vendors to provide rebates for subscribers, whereby the manufacturer
reimburses the carriers. Of the responding companies, 86% recognize a liability under
the program when the related revenue is recognized.

The following graph shows the responding companies’ average historical redemption
rates for all mail-in-rebate programs for all subscribers.

Average historical redemption rate for all mail-in-rebate programs

17% 17%

17%
21% – 30% redemption
51% 51% – 60% redemption

No responses were received in the less-than-21%, 31%–40% or 71%–100% categories.

Other revenue activities
Sixty-seven percent (67%) of the responding companies are currently or expect to be
eligible for the status of Eligible Telecommunications Carrier (ETC) this year, which is
consistent with the 2008 Global Wireless Industry Survey. Of those respondents that
currently receive or expect to receive ETC status this year, 83% expect the amount to
be less than 1% of service revenues, with the other 17% expecting the amount to be
less than 5% of service revenue.

Of the companies with revenue greater than $5.0 billion, 80% receive ETC revenue
compared with 63% in the 2008 Global Wireless Industry Survey.

Of the companies with revenue of less than $5.0 billion, 50% receive ETC revenue,
which is an increase from 37% in the 2008 Global Wireless Industry Survey.

The following chart illustrates how the responding companies classify costs related
to directory assistance (e.g., 411 calls) on the income statement.

Classification of directory services

11%

11%

Cost of services
78%
Cost of revenues
Network costs


Revenue recognition

Revenue assurance
The revenue assurance function plays an important role in ensuring adequate internal
controls over financial reporting and minimizing revenue leakage. In fact, each of the
nine respondents currently has a dedicated revenue assurance function.

The following graph shows the dedicated number of revenue assurance individuals.

Dedicated number of revenue assurance individuals
2
Greater than 200
2
1
101 – 200
1
3
41 – 100
2
3
16 – 40
1
4
1 – 15
3
2008
2009

The following graph shows the number of dedicated revenue assurance individuals
per $1.0 billion in total revenue.

Dedicated number of revenue assurance individuals per $1.0 billion

1
Greater than 11
2
7
6 – 10
3
4
1–5
2
2008
2009


Primary responsibility for the revenue assurance function varies across the responding
companies. The following chart shows the primary departments that oversee revenue
assurance functions.

Responsibility for revenue assurance

12%

33%
12%

Corporate finance
Revenue assurance and fraud/risk management
43% Accounting and customer care
Accounting department

Eighty-eight percent (88%) of respondents indicated that more than 80% of annualized
revenue is subject to revenue assurance programs, compared with 69% in the 2008
Global Wireless Industry Survey.

The following graph illustrates the revenue assurance and fraud management
opportunities reported by the responding companies.

Revenue assurance/fraud management opportunities

Unbilled roaming charges 9

Improper accounting or tracking
8
of rollover minutes
Incorrect rates 8

Unbilled text messages (SMS) 7

Unbilled access charges for content 7

Unbilled international calls 6
Issues with shared or
6
family plan minutes
Incorrect billing of taxes 6
Active telephone numbers at the
switch that do not exist in billing 6

Usage not being captured
6
at the network
Unbilled wireless Web
5
monthly charges
Usage being lost or not corrected
between the switch and the bill 5

Unbilled per-minute charges after a
5
customer exceeds the contract amount
Incorrect billing of surcharges 4

Incorrect decrementing 1



Revenue recognition

When asked which components of the revenue process represent the greatest areas
for revenue and margin leakage, the respondents identified the following in order of
importance: financials, network reliability, fraud, and roaming and carrier settlement.

Forty-three percent (43%) of respondents utilize an internally developed revenue
assurance platform or tool, compared with 28%, which use a purchased platform
or tool. The remaining respondents use a combination of internally developed and
purchased platforms or tools.

Customer billings and payments
Practice varies among carriers as to whether certain charges can be included in a new
subscriber’s first billing cycle. Of the responding companies, 78% allow equipment
purchases, and 89% allow activation fees to be included in a subscriber’s first
billing cycle.

The average number of billing cycles per month varies by respondent. The following
chart illustrates the distribution of billing cycles per month.

Average number of billing cycles per month

12%

50%

38%
Less than 15 cycles
15 – 20 cycles
Greater than 20 cycles

Practices vary from carrier to carrier as to whether postpaid subscribers are billed in
advance or in arrears. The following charts illustrate the range of percentages of
postpaid customers billed in arrears versus in advance for the responding companies.

Customers billed in arrears

12%

50%

38%
Less than 10%
10% – 20%
Greater than 90%


The average percentage of customers who are billed in arrears is 18% compared with
21% in the 2008 Global Wireless Industry Survey.


Customers billed in advance

12%

50%

38%
Less than 10%
80% – 90%
91% – 100%


The average percentage of customers who are billed in advance is 82% compared
with 79% in the 2008 Global Wireless Industry Survey.

We asked the responding companies to indicate the percentage of customer payments
that they received through each payment channel for both postpaid and prepaid
customers. The results are depicted in the following charts, including the average of all
responding companies.

Postpaid customer payment channel
Average 7 2 24 4 9 4 16 8 5 22 5 2 10

Carrier G 21 2 3 60 9 3 2

Carrier F 10 8 2 3 5 18 2 52
1
Carrier E 11 4 17 9 13 8 7 16 14

Carrier D 3 4 24 6 5 2 13 5 26 7 5
1
Carrier C 22 4 31 20 4 6 2 7 3
1 1 1
Carrier B 2 33 5 13 2 16 5 2 6 7 6
1
Carrier A 3 33 5 8 3 4 9 17 8 9
Percentage of customer payments

In-store payments Automatically charged to
credit card (preauthorized)
Agent/reseller locations
Charged to credit card (customer
Lockbox/direct mail/bank initiated monthly)
Retail kiosks Automatically charged to
debit card (preauthorized)
Telephone: Interactive voice
response (IVR) Charged to debit card (customer
initiated monthly)
Telephone:
Customer care/call center Internet payments
(non-IVR based) Initiated via handset menu
Automatically deducted from
bank account (e.g., ACH, online banking) Other*

*Other includes PC banking, sales central, and pay by phone.

In the 2008 Global Wireless Industry Survey, about a third of respondents (30%) said
greater than 60% of their payments were received via a lockbox, a bank, or direct mail,
while the majority of respondents (60%) reported receiving more than 30% of their
payments through those methods.


Revenue recognition

In comparison, the 2009 survey shows that no respondents reported receiving more
than 60% of their payments through a lockbox, a bank, or direct mail, and less than
half of respondents (43%) receive more than 30% of their payments via those
methods. Meanwhile, respondents said 16% of postpaid payments are now being
deducted automatically from bank accounts, up from 11% in 2008.

Prepaid customer payment channel
1 11
Average 9 45 2 25 2 10 22
1
Carrier G 16 46 4 9 10 2 3 7 2
1
Carrier F 10 62 21 4 2
1
Carrier E 3 80 16
1
Carrier D 47 3 48
1 1
Carrier C 60 28 2 4 4

Carrier B 30 60 7 3

Carrier A 5 10 2 63 222 12 2

In-store payments Automatically charged to credit card
(preauthorized)
Agent/reseller locations
Charged to credit card (customer
Lockbox/direct mail/bank initiated monthly)
Retail kiosks Internet payments
Telephone: Interactive voice Initiated via handset menu
response (IVR)
Other*
Telephone:
Customer care/call center
(non-IVR based)

*Other includes one bill interface, and pay by phone.

In the 2008 Global Wireless Industry Survey, 40% of respondents received greater than
45% of their payments through agent/reseller locations, while 20% of respondents
received greater than 80% through agent/reseller locations.

In 2009, a much higher number (72%) reported that they received greater than 45%
of their payments through agent/reseller locations; however, no respondents received
greater than 80% of their payments that way.


Compared with the 2008 Global Wireless Industry Survey, an average of 45% of
prepaid payments are made through agent/reseller locations—an increase of 31%.

The following graphs show the sources of payments by percentage for both postpaid
and prepaid subscribers and compared with the average of all responding companies.

Methods of postpaid customer payments
Average 37 5 29 12 17
1
Carrier F 79 17 3

Carrier E 66 4 26 4

Carrier D 8 52 40

Carrier C 25 13 30 7 25

Carrier B 36 7 23 9 25

Carrier A 8 6 25 9 52

Check (including e-check, electronic banking, and home banking)
Cash
Credit card (preauthorized and onetime use)
Debit card (PIN activated or PIN-less)
ACH/ARC/wires

In the 2008 Global Wireless Industry Survey, 70% of respondents received greater
than 30% of postpaid payments via check. In 2009, that number dropped to 50%.
Compared with the 2008 Global Wireless Industry Survey, responding carriers received
more postpaid payments via credit card, which increased from 21% to 29%, and via
debit card, which increased from 4% to 12%.


Revenue recognition

Methods of prepaid customer payments
1
Average 36 40 3 20

Carrier F 5 69 26
1
Carrier E 68 31
Carrier D 60 40
1
Carrier C 99
1
Carrier B 80 7 12
Carrier A 18 3 79

Check (including e-check, electronic banking, and home banking)
Cash
Credit card (preauthorized and onetime use)
Debit card (PIN activated or PIN-less)
Other

In 2009, 50% of respondents received greater than 65% of their payments via cash, up
slightly from 44% in 2008. In 2009, 30% of respondents received at least half of their
payments via credit card compared with 33% in 2008. There was no significant change
in the overall averages year over year for prepaid.

Handset insurance
Eighty-six percent (86%) of respondents offer handset protection programs to
postpaid subscribers. This program can be either self-insured by the provider or
provided through a third party. Of the respondents that offer a handset replacement
program, 83% use a third-party provider; the remaining 17% are self-insured.

Eighty-three percent (83%) of the responding companies that offer handset
replacement programs bill subscribers based on a fixed monthly amount; the
remaining 17% bill subscribers a onetime fee.

Thirty-three percent (33%) of respondents offer handset protection to prepaid
subscribers. Of those offering handset protection programs to prepaid subscribers, all
use a third-party provider for the service and charge $4.95 to $5.95 monthly.


All-inclusive packages
The responding companies were asked whether they offer all-inclusive packages to
subscribers. Seventy-eight percent (78%) of the responding companies said they do,
compared with 67% in the 2008 Global Wireless Industry Survey. Of those companies,
half indicated that less than 2% of their subscribers participate in the plans they offer,
and 67% charge at least $99 a month. The following graph illustrates the services
the respondents include in their all-inclusive packages.

Services offered in all-inclusive package

Voice 100%
Pictures 67%
Text/SMS to in-system
customers 67%
Internet 67%
Roaming 50%
Long distance 50%
Text/SMS to any number 50%
E-mail 50%
Web surfing 50%
Video 33%
GPS navigation 33%
Music 17%

Chart sums to greater than 100% because multiple responses were allowed.

In addition, responding companies also include such items as incoming text/SMS,
call waiting, caller ID, international texts, video messaging, directory assistance,
DirectConnect, and voice mail.

In the 2008 Global Wireless Industry Survey, 33% of respondents offered other
features in their all-inclusive packages, compared with 86% this year. In addition, 57%
of respondents offered pictures in their all-inclusive packages in 2009, while only
44% of respondents offered those services in their all-inclusive packages in
the 2008 Global Wireless Industry Survey.


Performance measures
The following pages cover performance measures for
evaluating results.

The average percentage of subscribers receiving
paper invoices decreased from 81% to 72% in
2009, and the average percentage of subscribers
receiving electronic invoices increased from 6% in
2008 to 14% in 2009.


Customers/metrics
The following chart depicts the average lengths of the responding companies’
relationships with postpaid customers.

Average length of customer relationship (postpaid)
40%
Greater than 80 months
67%
30%
61 – 80 months

30%
40 – 60 months
33%
2008
2009

The average length of customer relationships was approximately 64 months in 2009
compared with 70 months in the 2008 Global Wireless Industry Survey. For companies
with revenue greater than $5.0 billion, the average customer relationship was 66
months in 2009 compared with 73 months as reported in the 2008 Global Wireless
Industry Survey.

We asked companies how they define minutes of use (MOU). Fifty-six percent (56%)
of respondents define MOU as billed minutes (whether included as part of a plan or as
additional nonpackaged minutes); 44% of the respondents define MOU as minutes per
the switch regardless of whether those minutes are ultimately billed to the customer.

According to the responding companies, the average percentages of MOU that were
billed as excess (i.e., over plan) minutes were 3%. That’s compared with 7% in the
2008 Global Wireless Industry Survey and 6% in 2007.

Average monthly minutes of use per postpaid subscriber

801
744
670
MOU

2007 2008 2009 Year
Average MOU

The average monthly MOU for all responding carriers was 670 minutes in 2009,
compared with 801 in the 2008 Global Wireless Industry Survey and 744 in 2007.


2009 north-american-wireless-industry-survey

2009 north-american-wireless-industry-survey

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