Re: Cingular dropping more customers that they sold service to, due to 50% policy


"John Navas" <spamfilter0@xxxxxxxxxxxxxx> wrote in message
news:fvk2d29mjes00j1s6t9ntkv2u7p7m1k0p0@xxxxxxxxxx
On Wed, 02 Aug 2006 18:00:08 -0700, SMS <scharf.steven@xxxxxxxxxxx>
wrote in <44d14a98$0$96185$742ec2ed@xxxxxxxxxxxxxx>:

Scott wrote:
"John Navas" <spamfilter0@xxxxxxxxxxxxxx> wrote in message
news:kmc0d21qvp6g52qrv6t6kbgqgc1pmqt6b5@xxxxxxxxxx

In fact they are unprofitable, as I've shown in analyses posted here
earlier today.

You have posted nothing but unqualified and inexperienced opinion. Your
"analysis" is anything but definitive.

There is the synopsis of a study at
"http://www.mindbranch.com/products/R14-30.html"; that suggests the
proper metric for profit is "AMPU" (average margin per user) rather than
ARPU (averager revenue per user). This is more in line how other
businesses measure the desirableness of a customer. You can't look only
at how much the customer spends, you have to look at the resources they
consume.

Well, son of a gun -- you _can_ (sometimes) teach an old dog new tricks.
:) Congratulations on accepting the importance of AMPU, only ... hmmm
... let's see now ... three years after I pointed it out to you. :)
<http://groups.google.com/group/alt.cellular.cingular/msg/a985387e986ef7f5>

yawn



The importance they attribute to ARPU rests on two widely articulated
assumptions: (1) that margins for the lowest ARPU customers are
inherently unprofitable and (2) that new data services will lift ARPU,
and with that profitability. However, both of these assumptions are
flawed. By adopting either, operators may extend losses rather than
increase profits. There are two reasons for this.

While the second assumption might indeed be flawed, the first assumption
is actually valid.

Wrong



First, low revenue per user need not preclude a positive AMPU. In other
words, low revenue users can still be profitable as long as ARPU exceeds
average cost per user.

Correct.

And that's a wrap- you just admitted that you have been wrong with your
current line of misinformation.


For example, prepay customers have been widely
assumed as unprofitable. Indeed, NTT DoCoMo lists "low rate of prepaid
customers" as one of its advantages in the Japanese market. Prepaid
customers may be low ARPU. However, they may generate higher revenue per
minute than do post-pay customers. In addition, they require no handset
subsidies, no billing and collection costs, and produce minimal bad
debt. For these reasons, they can generate positive AMPU and with that,
profits."

Indeed, but that's _prepaid_, not _postpaid_ (as I've been saying).

What you're missing (or ignoring) is the fact that fixed costs per
postpaid subscriber are relatively high,

What you are missing is that you are absolutely wrong. Fixed costs are now
lower per sub than they have ever been. I'm looking at a two year cost
comparision for two carriers as I write this. Don't believe me? Take a
look at FTC quarterly filings for any carrier (except Cingular) and do a per
subscriber cost analysis over the last three years. Sprint, T-Mo, Verizon
and Alltel all show huge savings in these fixed cost areas over the last
three years (add Nextel pre-merger if you want).

Wanna try again?


and variable costs (actual
network usage) are relatively low, making high revenue postpaid
subscribers far more profitable than low revenue subscribers even though
they are paying much less per minute for air time.

Now you are saying that low revenue customers are simply not as profitable
as the rest. Which is it, Skippy?

Do you get whiplash from chaging directions so fast?

In other words, how
much a postpaid subscriber pays is far more important than how much air
time the subscriber uses, particularly since high revenue subscribers
often leave a lot of their air time on the table.

Proof?



.

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