US Cellular (USM), the wireless subsidiary of Telephone and Data Systems (TDS), is poised to market Research In Motion’s (RIMM) latest CDMA smartphone BlackBerry Tour 9630. The company has already revealed detailed specification of the device on its product page and has also released the new operating system verision (BlackBerry Tour 9630 OS 220.127.116.11) on its website.
Although an official confirmation is yet to come from US Cellular, a potential launch of BlackBerry Tour will enable it to join the league of Tier-1 US carriers in offering top-notch smartphones. BlackBerry Tour is currently available in the US on Verizon (VZ) and Sprint Nextel’s (S) networks. Leading US carriers are currently selling high-end smartphones through long-term distribution arrangements with manufacturers, which has boosted wireless subscriber growth and revenue per user.
However, smaller regional operators (such as US Cellular) lags behind their superior counterparts given the inability to sell these high-end devices, which is negatively affecting their bottom-line and margins. US Cellular has been hit by a weak economy and intense competition as it lost 88,000 customers during the last quarter.
The company is facing downward pressure on ARPU (average revenue per user) which is expected to sustain at least through the second half of 2009. US Cellular is being challenged by the increasingly competitive domestic wireless market, reflected by increasing post-paid churn (customer switch).
Competition has increased due to the roll out of exclusive premium wireless handsets by top-tier operators such as iPhone 3GS by AT&T (T). Based on uncertain economic conditions, US Cellular has withdrawn its net subscriber addition target for 2009. High-end premium smartphones have greater contribution to ARPU than entry-level smartphones and other regular handsets.
Driven by strong demand of smartphones and associated data services, US Cellular is expanding the nationwide deployment of its 3G EV-DO networking. If eventually launched, BlackBerry Tour will considerably strenghen the company’s smartphone offerings while providing an opportunity to boost ARPU. However, the high customer return rate (as experienced by Sprint) associated with the device due to a technical defect remain an issue for consideration.
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