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Challenging Trends in call rates

By TelcoNovember, 2006May 20th, 20242 min read

I like nothing more than mining through the millions of CDRs that we collect and process on behalf of our Partners (actually, I do like more than that, but some things are beyond the scope of this blog). It’s like playing a jigsaw puzzle – sorting through lots of small pieces of information to discover a bigger picture.

There are a few fairly simple trends that I have observed. Call rates continue to trend down, but this is more than made up for by the increase in usage, i.e. the number of calls people make. Because calls are so cheap, people don’t think as much about the cost of them, and so they make more calls.

So we have two negative trends here: commoditisation – that basic phone calls have become a commodity distinguished only by price, and price erosion – the prices of these commodities continues to trend down.

For an SP, this poses a huge risk. They may be able to maintain margins in percentage terms, but because the total spend per customer (ARPU) is trending down, the profit per customer is also trending down. So if you want to increase your profits (and who doesn’t?), you have two choices: more customers, or get customers to spend more.

Have you recognized these challenges? What are you doing about them?

This was also posted at [Billing Bureau].

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