& cplSiteName &

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.
Sarah Thomas
50%
50%
Sarah Thomas,
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.
Sarah Thomas
50%
50%
Sarah Thomas,
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
In honor of Valentine's Day, WiC is highlighting five of the sites, companies, products, commercials and more related to women at work that we're digging this month.
Biases from computer programs will seep into the algorithms behind AI, meaning computers of the future could be just as homogenous as today's tech workforce.
Female-only co-working spaces are popping up all over the place, but is cutting men out the best way to level the playing field in the tech industry?
A handy rundown of the myriad terms used to describe the challenging circumstances surrounding women in comms, many involving glass.
Making recruiters solely responsible for increasing diversity is not effective when there isn't internal buy in, Facebook's struggles to diversify show.
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
4.5G Evolution: Peter Zhou on Advanced MIMO Technologies & 5G Business Prep

2|25|17   |     |   (0) comments


In the process of service transformation, operators need to catch three major opportunities and start deploying in 4.5G networks, such as video, household broadband access and digital transformation of vertical industries. 5G is coming. Operators don't need to wait for it to happen but should progressively deploy 4.5G networks by introducing 5G-oriented ...
LRTV Custom TV
What WTTX Can Deliver

2|23|17   |     |   (0) comments


Mohamed Madkour explains the benefits of WTTX while Dimitris Mavrakis discusses the challenges of delivering home broadband access.
LRTV Custom TV
Huawei on Mobile Broadband

2|23|17   |     |   (0) comments


Mohamed Madkour shares his vision on MBB for the next three years.
LRTV Custom TV
Analysys Mason Talks About the Future of Digital Operations

2|23|17   |     |   (0) comments


The future of digital operations has three key aspects: 1. Highly automated operations for both service and network; 2. Highly converged BSS/OSS for business and resources; 3. Highly merged management and control for real-time cloud native operations.
LRTV Interviews
Software Trends in the Telecom Sector

2|23|17   |   03:40   |   (0) comments


Heavy Reading senior analyst James Crawshaw talks with Telecoms.com Editorial Director Scott Bicheno about trends and developments in the telecoms software sector and what to expect at MWC 2017.
LRTV Custom TV
Huawei's Pre-MWC Analyst Briefing 2017 Highlights

2|22|17   |     |   (0) comments


Huawei shares its vision for this year's MWC.
LRTV Interviews
MWC17: 5G, Cloud RAN & More

2|21|17   |   04:35   |   (0) comments


Ovum Senior Analyst Julian Bright talks to Scott Bicheno from Telecoms.com about all things MWC, including Cloud RAN, Huawei's pitch to the industry and the road to 5G.
LRTV Interviews
MWC 2017's Key 2-Letter Terms

2|20|17   |   08:29   |   (1) comment


5G, AI, VR... these are just some of the two-letter terms that will dominate show-floor chat at MWC 2017 in Barcelona, according to these two blow-hards (a.k.a. Scott Bicheno of Telecoms.com and Light Reading's Ray Le Maistre). And then there's PB...
LRTV Interviews
Key Trends for Mobile Operators in Developing Markets

2|20|17   |   06:37   |   (0) comments


Ovum's Matthew Reed talks to Scott Bicheno from Telecoms.com about the challenges and opportunities facing mobile operators in the developing markets of Africa and the Middle East.
LRTV Documentaries
YouTube Takes on Facebook Live-Streaming

2|17|17   |     |   (0) comments


Popular 'YouTubers' will be the first to get the new service on their smartphones. You have been warned.
LRTV Custom TV
Open Source NFV/SDN Automation

2|17|17   |   05:54   |   (0) comments


AT&T ECOMP (Enhanced Control, Orchestration, Management and Policy) code is transitioning into the Linux Foundation for placement into open source. In this video, Carol Wilson provides an update on the maturation of open source ECOMP and meets with industry leaders from AT&T, Bell Canada, Orange, Linux Foundation and Amdocs to discuss what this means for the ...
LRTV Documentaries
Uber & NASA Collaborate on Flying Car Project

2|16|17   |     |   (0) comments


Is Uber for real? Well, it's hired NASA engineer Mark Moore to lead the project, and he wouldn't come cheap.
Upcoming Live Events
March 21-22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Uber's HR Nightmare: Company Investigates Sexual Harassment Claims
Sarah Thomas, Director, Women in Comms, 2/21/2017
Broadband Has a Problem on the Pole
Mari Silbey, Senior Editor, Cable/Video, 2/21/2017
Verizon to Start Fixed 5G Customer Trials in April
Dan Jones, Mobile Editor, 2/22/2017
Cloud Rains on HPE Earnings
Mitch Wagner, Editor, Enterprise Cloud, 2/24/2017
Verizon Fixed 5G Tests to Top 3Gbit/s?
Dan Jones, Mobile Editor, 2/23/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Animals with Phones
No One Likes This Click Here
Take a hint!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.