Bundling premium subscription content in to wireless data plans is becoming a popular strategy for mobile service providers to cut churn.
Content bundling has the potential to cut churn by almost half. The impact of reducing the churn rate by 1 percent leads to 2.5 percent revenue growth over a 5 year period, assuming the operator acquires subscribers at the same rate, research firm Strategy Analytics in its latest report on wireless operators said.
Sprint, a wireless operator in the US, today announced unlimited plans offering Hulu TV and TIDAL music streaming.
“In addition to unlimited data, talk and text at a great price, wireless users are looking for features like HD streaming and entertainment services — on a reliable network,” said Dow Draper, Sprint chief commercial officer.
The strategy of Sprint is to bring the best content to wireless phone customers along with the best network with an investment of $6 billion this year.
Sprint, a SoftBank-owned operator, said it is making its largest network investment in years and its Next-Gen Network build is underway. Sprint is currently upgrading cell sites to tri-band service using 800MHz, 1.9GHz and 2.5GHz. It is adding new cell sites and densifies the mobile network with more small cells. Sprint will launch mobile 5G in the first half of 2019.
Reducing churn and increasing subscriber engagement is at the heart of most mobile operator content strategies, Strategy Analytics said.
“The objective of bundling access to premium subscription video or music services into tariffs is to upsell subscribers to higher priced tariffs with larger data allowances, drive user engagement and data traffic, all with the aim of reducing churn,” Phil Kendall, director of Strategy Analytics, said.
Sprint’s higher churn rates compared to its Tier 1 rivals remains one of its challenges. Sprint Business reported its lowest churn rate in over five years in FY17, which was aided by the carrier’s expanding tri-band LTE coverage and network densification initiatives, Technology Business Review said.
Technology Business Review has analysed churn of T Mobile, AT&T, Comcast, Verizon and Sprint.
T Mobile, which has a strong content strategy in place, reported post-paid phone churn of 1.07 in Q1 2018, driven by the carrier’s increased investment in LTE network coverage and data speeds. T Mobile may purchase additional spectrum and deploy 20,000 small cells in 2019 to densify its network and prepare for 5G.
AT&T’s mobile video bundles contributed to reduction in post-paid churn by six basis points to 1.06 in Q1 2018 despite competition from T Mobile’s Netflix on Us.
Comcast, the broadband giant in US, has bundle plans to lower churn and provide customers greater value proposition. Comcast observed increase in video and HSI ARPUs as customers adopt premium services and migrate to faster broadband speeds.
Verizon Wireless’s post-paid phone churn rate reached 0.8 in the first quarter of 2018, as its unlimited data plans and enhanced network coverage help to manage growth in the carrier’s subscriber base.
Strategy Analytics said the majority of mobile operators remain focused on monetizing data. Both AT&T and Verizon demonstrate leadership in content because of their position in content distribution and content creation. AT&T acquired Time Warner. Verizon acquired Yahoo and AOL assets earlier.
Mobile operators across the world should be aggressive with 5G consumer propositions and use content to demonstrate the value of 5G networks to users beyond an improvement in data speed, Nitesh Patel, director of Strategy Analytics, said.