Mass Adoption of Smartphones is Eroding Operator Profitability

The increasing popularity of smartphones is threatening mobile operator profitability, new research from WDSGlobal has found. ­A combination of expensive subsidies, fixed data tariffs, complex service set-up and a high cost-to-support mean it can now take up to 16 months just for carriers to break-even on a subscriber.

The WDSGlobal research found consumers are increasingly looking to connect their smartphones to their internet, email and social networking accounts out-of-the-box. However, problems in setting up these more complex data services on smartphones means that, on average, smartphone support transactions take 30% longer to resolve than featurephone transactions.

The survey of more than 1,000 UK consumers found that:

  • Almost a third experienced set-up problems with email - the most problematic data service
  • 21% experienced problems setting up the internet on their device, and 18% had problems with MMS
  • 27% of respondents did not find any of the support options available to them effective
  • Almost 10% did not even try to find a resolution, they simply abandoned the service altogether

"It's something of a perfect storm," explains Tim Deluca-Smith, vice president of marketing at WDSGlobal. "The cost of selling and supporting smartphones is significantly higher than it is for the traditional featurephone segment. Operators are therefore keen to ensure their subscribers maximise the advanced revenue-generating features of smartphones. Unfortunately, a large percentage of consumers are struggling with the advanced functionality of the smartphone, and are defaulting back to more familiar voice and SMS services. Combine these conditions and it's clear to see how operators' margins are quickly being eroded." Article