AT&T vs. Sprint: Who Has the Greater ARPU?

AT&T T continues to lead the wireless service market in the United States. But how does its postpaid ARPU (average revenue per user) compare to Sprint S, its distant, third-place competitor? On Tuesday, AT&T announced that it had increased its ARPU to $64.93 during the second quarter, amounting to a 1.7 percent increase. This was significantly higher than Verizon's VZ ARPU, which came in at $56.13 (a 3.7 percent increase) during the quarter. MetroPCS PCS, which provides cheaper plans to cellular customers, reported a quarterly ARPU of $40.62. This was by far the lowest ARPU among the major companies within the telecommunications industry. But it was Sprint -- the company known as the only carrier that provides iPhone users with unlimited data -- that came close to matching AT&T's ARPU. With a postpaid ARPU of $63.38, Sprint's numbers are both intriguing and significant. Sprint also announced that it sold nearly 1.5 million iPhones, roughly the same amount that it sold last quarter. During both quarters, 40 percent of the iPhones were sold to new Sprint customers, who currently pay a minimum of $79.99 a month for service. At that rate, customers receive unlimited data but only 450 minutes. For 900 minutes, Sprint charges $99.99 per month. For $10 more, users can get unlimited minutes. This is significantly different from AT&T, which charges as little as $59.99 per month for iPhone service. Those who choose to pay the lowest rate will receive only 450 minutes and 300MB of data. Customers who want more will have to pay more -- all the way up to $139.99 per month (assuming they stay within their data allotment). In theory, this could allow AT&T to get ahead of Sprint. But by offering a monthly plan that is significantly cheaper, AT&T has unavoidably reduced its ARPU. Some customers will always choose the cheapest plan possible. Sprint, meanwhile, attracts a different kind of Android or iOS customer -- the kind who expects to use a lot of data. This customer has examined the cost of other data plans, understands their limitations, and would prefer to pay a premium for an unlimited plan that does not reduce the speed of their Internet after a few gigabytes are used. This would explain why Sprint has a higher ARPU than MetroPCS and Verizon. It also explains why it is not that much lower than AT&T's ARPU. Follow me @LouisBedigianBZ