Light Reading
Pricing is the only way to differentiate in mobile now, and Sprint's losing precious ground to T-Mobile.

T-Mobile Leads, Sprint Suffers in Pricing Wars

Sarah Reedy
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
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?
Educational Resources
sponsor supplied content
Educational Resources Archive
More Blogs from Light Reedy
The fine print on Sprint's new $60 plan suggests it can prioritize other plans' traffic first -- a letdown, and maybe even a net neutrality violation.
Verizon is reportedly working with an industry consortium to launch its own app store, but past efforts suggest it's not a smart move for the operator.
Join us Thursday at 12:00 p.m. EST for a live chat with Heavy Reading's Roz Roseboro about how NFV is changing data center requirements and operations.
Nokia's new parent is still figuring out its mobile story, as it launches a new low-end phone weeks after saying it was done with low-end phones.
With Sprint CEO Dan Hesse heading for the exit door, we look back at his six-and-a-half year tenure, from Nextel, to WiMax, and those unforgettable black-and-white commercials.
Flash Poll
LRTV Custom TV
VeEX – Live from the Show

8|21|14   |   5:58   |   (0) comments


An overview of VeEX Test and Measurement solutions including TX300S multi-service test set with VeExpress cloud-based management system, UX400 universal modular platform supporting 100G testing, and the redesigned RXT modular platform.
LRTV Custom TV
Transitioning CE 2.0 Networks Into the SDN & NFV Era With Telco Systems

8|19|14   |   5:19   |   (0) comments


Telco Systems' Ariel Efrati (CEO) and Moshe Shimon (VP of Product Management) discuss virtualization and how the company's new Open Metro Edge solution utilizes the SDN and NFV concepts to accelerate and orchestrate service delivery through its innovative product portfolio and software applications.
LRTV Custom TV
NFV Myths: Is NFV Still Several Years Away?

8|11|14   |   1:13   |   (0) comments


Some say that NFV (network functions virtualization) is still several years away from being implemented on mobile operator networks. This isn't the case. Operators can get started on their paths to NFV now, as this short video from Skyfire shows.
LRTV Custom TV
A New Security Paradigm in SDN/NFV

7|28|14   |   02:54   |   (0) comments


Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
LRTV Documentaries
BTE Keynote: The Software-Defined Operator

7|24|14   |   18:43   |   (1) comment


Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
Light Reedy
Numbers Are In: LR's 2014 Salary Survey

7|24|14   |   1:25   |   (7) comments


Our fourth annual Salary Survey paints a picture of who's hiring, firing, earning, and yearning for a change in the telecom industry.
LRTV Custom TV
Driving the Network Transformation

7|23|14   |   4:29   |   (0) comments


Intel's Sandra Rivera discusses network transformation and how Intel technologies, programs, and standards body efforts have helped the industry migration to SDN and NFV.
LRTV Custom TV
Distributed NFV-Based Business Services by RAD

7|18|14   |   5:38   |   (0) comments


With the ETSI-approved Distributed NFV PoC running in the background, RAD's CEO, Dror Bin, talks about why D-NFV makes compelling sense for service providers, and about the dollars and cents RAD is putting behind D-NFV.
LRTV Custom TV
MRV – Accelerating Packet Optical Convergence

7|15|14   |   6:06   |   (0) comments


Giving you network insight to make your network smarter.
LRTV Custom TV
NFV-Enabled Ethernet for Generating New Revenues

7|15|14   |   5:49   |   (0) comments


Cyan's Planet Orchestrate allows service providers and their end-customers to activate software-based capabilities such as firewalls and encryption on top of existing Ethernet services in just minutes.
LRTV Custom TV
Symkloud NVF-Ready Video Transcoding, Big Data

7|9|14   |   3:41   |   (0) comments


Kontron and ISV partner Vantrix demonstrate high-performance video transcoding and data analytic solutions on same 2U standard platform that is ready for SDN and NFV deployments made by mobile, cable and cloud operators.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Today's Cartoon
Hot Topics
Level 3 Does Big Data Differently
Carol Wilson, Editor-at-large, 8/21/2014
IoT Alert: Samsung Snaps Up SmartThings
Mari Silbey, Independent Technology Editor, 8/15/2014
Comcast Streams Back to School
Mari Silbey, Independent Technology Editor, 8/21/2014
Line-Powered Phone Lines: A Hot Topic Again
Carol Wilson, Editor-at-large, 8/20/2014
Analyst: Ericsson, Oracle Top Shrinking SDP World
Carol Wilson, Editor-at-large, 8/19/2014
Like Us on Facebook
Twitter Feed