The opening of GSM Americas annual conference showed different approaches to face the fall of the average revenue per user (ARPU) that the market is registering, due to the service penetration in the sectors of low resources. The event, that this year is being held in Acapulco, Mexico, gathers the representatives of the GSM operators, from North America as well as from Latin America.

The executive director of GSM Association Latin America (GSMALA) and the representative of ENTEL PCS of Chile, Juan Carlos Jil, opened the conference sessions presenting the continuous reduction of the average ARPU in the region. The graphs showed the way in which the ARPU, that, in 1997 exceeded the US$ 55, in 1999 had already fallen to almost US$ 30, and in 2002, it fell below the US$ 20. As from there, it stabilized gradually in a smooth reduction curve, until it reached the current US$ 15.

However, this effect is eased by the roaming income of the Caribbean. If the four great economies are considered (Argentina, Brazil, Mexico and Chile), the ARPU went on decreasing up to US$ 13 current average. In that line, according to the figures of WirelessIntelligence.com for the second quarter 2006, Venezuela has the highest ARPU in Latin America of almost US$ 15, followed by Mexico, that is around the US$ 14, and Colombia one of the lowest, that does not reach to US$ 6. Argentina and Chile are around the US$ 12 and Brazil reaches the US$ 9 average per user.

The fall is worrying due to the difficulty in compensating the purchase power of each customer, mainly due to the handset prices. The operators gathered in GSMALA decided in Acapulco to abandon the tiring effort exerted to encourage the Emerging Market Handset Programme (EMH), due to the lack of interest of the providers in manufacturing low cost handsets (lower than US$ 40- US$ 30). This program was launched with a lot of hype in 3GSM Congress in February of 2005, and it is one of the greatest failures in the combat against the digital gap.

GSM Americas 2006 main panel, called Strategic Leadership Summit, was made of Marcelo Erlich, Ancel’s CEO (Uruguay), Maximo Lafuente Vázquez, Cubacel’s director (Cuba), Francisco Gutiérrez Campos, of Personal (Paraguay) and James Healy, VP of T-Mobile (United States) and GSM North America chairman. In the table, the different approaches to face the challenge of ARPUs fall that even affects the Cuban "market”. Lafuente revealed that in his effort to spread the service, of the 200 thousand customers of Cubacel, 90% is prepaid and the ARPU fell from US$ 50 to US$ 20.

The Uruguayan Erlich amazed with an argument that will trigger, without doubts, a strong debate among the operators of the region. He said that so as to increase the ARPU the rating reduction should be pushed “to reduce the break-up point of the elasticity of prices fall”. According to Erlich, a reduction in the service cost really perceived by the users will make these decide to talk more, and that will work on an increase of the billing. The American Healy, from T-Mobile seemed to agree with him by revealing that his company’s strategy to face ARPUs  fall, has been to launch  “packs and more packs" of minutes.

Erlich reasoning stirred the hearts of operators and devices and value added services providers filling the room in the auditorium. Gutierrez, from Personal Paraguay affirmed that “we cannot reduce prices indefinitely”. And Roni Grosfield, director for Latin America of the message solutions provider Pontis, that was in the auditorium, stood up to answer to the Uruguayan about the way to face the issue by not destroying the current services but promoting the use of the data applications.

Jil’s presentation had shown that, in the second quarter of 2006, data ARPUs rate  over voice was much lower in Latin America than in Asia and Europe and there is a lot of space to grow in that sense. Korea has a 21% of the ARPU in data and Japan reaches to 29%. In Western Europe, Great Britain reaches to 23% and Spain 21%. In Latin America, Argentina and Colombia only reach to 11%, Chile, 10% and Brazil does not exceed the 8%. Together, data income only reaches to 7% of the total in Latin America.