How well the freemium model might ever work in the mobile business is an unsettled question. But offering a tier of free service might well be considered as a customer acquisition cost, the thinking being that some percentage of users will eventually become customers.
customer acquisition costs for mobile accounts vary between countries, account types and service providers. Gaining a single mobile account can cost hundreds of dollars, but probably no longer represent 30 percent of operating costs, as once seemed the case.
Larger tier-one mobile operators might have might have acquisition costs for prepaid accounts about $400 each.
In the company's most recent earnings call with investors, Tucows CEO Elliot Noss said Ting acquired 150,000 FreedomPop customers using Sprint's network for $3.6 million, or $24 per account.
Tucows says 25,000 of those customers were spending significant amounts of money on the service. That implies a cost per acquired customer of about $144, well within industry norms for a new consumer account. Those accounts likely are producing an average of about $14 a month in subscription revenue.
That might make sense, long term, for a mobile virtual network operator with low enough costs. What remains unclear is whether a tier-one facilities-based mobile operator in the U.S. market could justify the freemium model, as expected average revenues per user and account are much higher than $14 a month.
In 2018, U.S. mobile operator ARPU was about $38 per line. The revenue per account hinges on how many devices, and of what type, are active on any single account.
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