Light Reading

T-Mobile Leads, Sprint Suffers in Pricing Wars

Sarah Thomas
10/7/2013
50%
50%

Has competition in the wireless industry really boiled down to price alone?

That's what Moffett Research's Craig Moffett believes, and he's crowning T-Mobile US Inc. the clear-cut winner and Sprint Corp. (NYSE: S) the loser. AT&T Inc. (NYSE: T) and Verizon Wireless certainly aren't hurting, but they'll likely have to drop prices soon too, the analyst finds.

His logic is sound: Two years ago, the operators competed on network quality, handset selection, and price, which left little room for T-Mobile, whose handset selection was weak, or Sprint, whose network quality was awful, to compete. Now, handset selection is for the most part on par across the big four and network quality has become too nuanced an idea to measure with LTE rollouts well underway and spectrum positions ever in flux.

Price is now the bottom line. This is why so many MVNOs have popped up -- the more pricing has changed, the more desire consumers have for cheaper alternatives. This environment, along with its aggressive "uncarrier" messaging, has helped T-Mobile make a comeback in a big way. Moffett finds that its pricing cuts are attracting high value consumers, not just the credit-challenged, as feared. Sprint, meanwhile, continues to bleed customers. (See: Here Comes the Unlimited 4G Price War.)

Moffett's conclusion is that Sprint will need to cut prices on its services or its handset prices in order to compete. While it's the only operator offering unlimited data, its prices are on par with AT&T and Verizon, which isn't justified given its network deficiencies that will persist for the next year or two. What's more, AT&T and Verizon may also find themselves cutting prices in order to catch up with T-Mobile. (See: T-Mobile Touts Value in 4G Price War.)

"Sprint is now playing catch-up... T-Mobile is now the industry's price leader despite having a substantially stronger network than Sprint," Moffett writes. "The ball is in Sprint's court."

The pricing war should ultimately be good news for consumers. We’ve already seen pricing get more creative in terms of shaking up the subsidy model, offering data-sharing options, and getting rid of the contract in many cases. But, with the exception of T-Mobile, prices are still quite high. (See: T-Mobile: Might As Well JUMP and Sprint Fires Back at T-Mobile With Unlimited Guarantee.)

Lower prices will be a welcome change, and a necessary one for Sprint. I expect all the operators to respond in the coming months, just as they did in the prepaid space. When price is the main -- or perhaps, only -- way to differentiate, down is the only way to go.

— Sarah Reedy, Senior Editor, Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
DanJones
50%
50%
DanJones,
User Rank: Blogger
10/7/2013 | 5:16:42 PM
Re: Unlimited, but expensive
Seems optimistic for sure but that's the CEO's words. These 2 years are totally crucial in terms of updates for Sprint whatever happens.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
10/7/2013 | 4:57:59 PM
Re: Unlimited, but expensive
If SoftBank succeeds in two years, it will be a miracle. That's not entirely a reflection on Sprint, it's just that turnarounds aren't completed too quickly in most businesses.
DanJones
50%
50%
DanJones,
User Rank: Blogger
10/7/2013 | 4:54:33 PM
Re: Unlimited, but expensive
SoftBank is looking at the Sprint turnaround as a 2 year process.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
10/7/2013 | 4:49:02 PM
Re: Unlimited, but expensive
Softbank might be better to do that, but depending on their plans when they purchased Sprint, they might think the short term gains from higher pricing might prove to be better financially.

Softbank might also consider the unlimited plans the best differentiating factor Spirnt has. If it is differentiating enough, people will pay for it.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
10/7/2013 | 4:36:42 PM
Re: Unlimited, but expensive
Do you think Softbank won't allow them to ditch unlimited or to lower prices? I'm sure they want to hold on to unlimited for as long as they can, especially given all the ads plastered wtih it, but Softbank might be smart to trade lower prices/lower returns for subscriber additions in the short term.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
10/7/2013 | 4:34:23 PM
Re: Unlimited, but expensive
Sprint probably should change its pricing structure to compete, but the execs at Softbank may not allow it. They're controlling what happens at Sprint now -- for better and for worse.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
10/7/2013 | 3:00:50 PM
Unlimited, but expensive
It's really hard to compare pricing plans because all operators do things differently (on purpose too...to make it hard to compare), but T-Mobile ends up significantly cheaper than its rivals, Moffett finds. I understand why Sprint had to raise prices awhile back, but I don't understand why it doesn't lower them now. I think it'll have to as it waits to complete Network Vision and have a good network story to tell. 

Does it think its unlimited messaging will be enough to sustain it without lowering prices? Do you?
More Blogs from Que Sera Sarah
But the bar it has set is really, really low, according to a recent Dell study.
The steady drumbeat of progress continues on as new groups are formed, R&D centers opened, timelines presented and strategies refined for making 5G a reality by 2020.
P3's study of VoLTE in the DC area shows it delivers high-quality, crisp calling, but a lot of stars still have to align to be able to use it.
And Light Reading wants to help! We're proud to partner with Intel to identify and profile female and minority-led communications startups competing for the funding.
Chicago CIO and Women in Tech at BTE keynoter Brenna Berman explains why we need more women and minorities in the tech industry.
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
BTE 2015 Sponsor Keynote: HP
Dr. Prodip Sen, CTO, Network Functions Virtualization, HP
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
LRTV Custom TV
The New IP Goes Mobile With vEPC

7|2|15   |   1:12   |   (0) comments


Heavy Reading's Gabriel Brown discusses results of a Light Reading survey sponsored by Brocade that shows a clear commitment by mobile operators to move quickly to virtual EPC deployment.
LRTV Custom TV
Making Business Sense of SDN

7|2|15   |   1:42   |   (0) comments


Results of a Brocade-sponsored survey show that CSPs have a clear sense of SDN use cases but are wrestling with the business case. Sterling Perrin of Heavy Reading looks behind the numbers.
LRTV Custom TV
NFV Will Be Here Sooner Than You Think

7|2|15   |   2:22   |   (0) comments


Forget the usual ten-year cycle for new technologies – NFV will be a core part of CSP networks in five years, based on results of a Brocade-sponsored survey, says Heavy Reading's Caroline Chappell.
LRTV Custom TV
The New IP Gains Traction With CSPs

7|2|15   |   1:42   |   (0) comments


Roz Roseboro of Heavy Reading analyzes results of a Light Reading survey sponsored by Brocade showing that CSPs are getting serious about making the transition to the New IP era.
LRTV Custom TV
It's (Real) Time for Analytics

7|2|15   |   1:42   |   (0) comments


Heavy Reading's Jim Hodges looks at how CSPs say they plan to use analytics to deploy new services in real time as part of The New IP, based on results of a survey sponsored by Brocade.
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (7) comments


Two co-workers discuss the benefits of IoT technology.
LRTV Interviews
Ericsson Opens Up on OPNFV

6|30|15   |   14:16   |   (1) comment


Martin Bäckström, VP and head of industry area Datacom at Ericsson, talks to Light Reading founder and CEO Steve Saunders about the emergence of OPNFV, the importance of standards and Ericsson's OPNFV plans.
LRTV Custom TV
NetNumber Founder Discusses NFV/SDN Impact on SP Networks

6|26|15   |   4:15   |   (0) comments


NetNumber Founder Doug Ranalli examines why SPs need a new network infrastructure for service agility. While NFV and SDN are the tools, the old ways of thinking about signaling control are inhibitors. Doug provides his recommendations.
LRTV Custom TV
Orchestrating NFV vCPE Services Across Multivendor Networks

6|26|15   |   5:46   |   (0) comments


Nirav Modi provides an overview of vCPE, the fastest-growing NFV use case, showing how Cyan's Blue Planet orchestrates vCPE services across a multivendor infrastructure to rapidly deliver new managed services for business customers.
LRTV Custom TV
ZTE at LTE Summit Amsterdam 2015

6|26|15   |     |   (0) comments


As one of the leading global telecommunications providers, ZTE presented its cutting-edge technology at LTE World Summit 2015 in Amsterdam. On display at ZTE's booth were the latest R&D achievements in wireless, 5G development, HetNet, deep convergence of FDD and TDD, and RCS/IMD/iSDN/vCN.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Hot Topics
Who's Feeding Fiber to LinkNYC Hotspots?
Mari Silbey, Senior Editor, Cable/Video, 6/29/2015
Colt to Jettison Ailing IT Business
Iain Morris, News Editor, 6/30/2015
Eurobites: Activist Investor Takes Stake in AlcaLu
Paul Rainford, Assistant Editor, Europe, 6/30/2015
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones