Reeling RIM May Dial Back Its Service Fees for Carriers
More lousy news for long-suffering Research In Motion. Under mounting pressure from carriers, the company is reportedly considering reducing the service fees it charges them for access to its BlackBerry server infrastructure.
And that’s a big deal.
Those fees generate some $4.09 billion for RIM annually, which is about a third of the company’s revenue. Any reduction in them at this point in RIM’s don’t-call-it-a-death-spiral would add further drag to the company’s already hamstrung efforts to right itself. And while neither RIM nor its carrier partners are commenting on these service fee reductions, analysts are already predicting they’re a sure thing. Sanford C. Bernstein analyst Pierre Ferragu, for example, expects service fee revenue to drop to $2.7 billion in fiscal 2014 and $2.3 billion in fiscal 2015.
A precipitous decline. But perhaps a realistic one. On its last earnings call, RIM said its service revenue was down approximately 12 percent.
Reached for comment, RIM declined to elaborate on its discussions with carriers, saying only, “RIM intends to continue generating a revenue stream from the services we offer.”