Light Reading
The big four US operators managed to add 800,000 post-paid subscribers in the past three months, but the scales are tipping in T-Mobile's favor.

T-Mobile Not Stealing Customers… Yet

Sarah Reedy
4/3/2014
50%
50%

Are T-Mobile's "uncarrier" ways helping it steal customers from its competitors? If you follow the boisterous claims of its CEO, you'd think US consumers are chomping at the bit to tear up their contracts and join the magenta movement. But the numbers suggest that's not the case, or at least not yet.

According to the latest consensus estimates for wireless subscriber growth, which T-Mobile US Inc. provided to industry financial analyst Craig Moffett as part of its quarterly survey of sell-side estimates, the industry as a whole gained 800,000 postpaid customers in the past three months.

So where are these nearly one million customers coming from? For now, some could be from the smaller operators, upgrading to a smartphone and a tier-one provider for the first time. Others are likely tablet subscriptions or other non-mobile postpaid users. But, increasingly, these customers have to be coming from other big carriers, which means additions can't stay that high for long.

In fact, I'm surprised they have so far. The level of promotions in the wireless industry has to be at an all-time high. In the past week alone, Verizon Wireless dropped prices on its More Everything plans to match AT&T Inc. (NYSE: T)'s offer of four lines and 10GB of data for $40 per line per month, and today it's offering up 1GB of free data to tablet customers on the plan. (See AT&T Joins Verizon in the Shared Data Pool.)

When you add in Sprint Corp. (NYSE: S)'s Framily plans, and T-Mobile's device financing, lower international rates, free tablet data, early termination fee offer, and the other three's responses to nearly all these moves, it's hard not to foresee a lot of customer grabbing going on. (See T-Mobile to Pick Up 'Evil' Family Fees, Sprint Launches No-Sharing 'Framily' Plans, AT&T Lures T-Mobile Subs With $450 Promise, Look Inside T-Mobile's 'Uncarrier' Transformation, T-Mobile Kills Contracts, Launches LTE Network, and T-Mobile Zeros In on Tablets.)

That said, it hasn't yet erupted into an all-out price war. While the operators have tweaked their offers and repackaged how they price, the actual prices haven't come plummeting down. Their earnings haven't been affected yet either. But going forward, they will likely come at the expense of subscriber growth, if not revenues. (See Verizon's 4G Strength Keeps It Above the Fray.)

Moffett says that consensus expectations for 2014 post-paid net adds have fallen at Verizon from 3.53 million nine months ago to less than 3 million today, and from 1.4 million six months ago at AT&T to 1.2 million today. For Sprint, postpaid subscriber losses in 2014 have more than doubled over the past three months to 617,000. T-Mobile, meanwhile, continues to grow -- from 1.3 million three months ago up to 2.9 million additions expected today. Incredibly, a year ago, T-Mobile's estimates were only for 50,000 postpaid subscriber additions this year. (See T-Mobile Leads, Sprint Suffers in Pricing Wars.)

That growth has to come from somewhere. But as Moffett points out, the estimates have to be off base. He writes, "At Verizon, consensus estimates for churn has ticked up by 2 bps [basis points] over the past three months, AT&Tís has increased 3 bps, Sprintís, 8 bps, and T-Mobileís fell by 4 bps. Street estimates, in other words, seem to imply that the TMUSís subscriber gains are largely coming out of thin air, and that the big fourís recent promotion wars have really only resulted in, well, more customers for everyone."

At some point, that can't last, and it might just take an all-out price war to tip the scales. T-Mobile has made moves in that direction, and Sprint's new boss, SoftBank Corp. CEO Masayoshi Son, has promised one if he's able to acquire the Uncarrier. So far, there's more of price squabble in the US, but as T-Mobile's consensus estimates prove, a lot can change in a very short amount of time.

— Sarah Reedy, Senior Editor, Light Reading

(29)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 3   >   >>
mhhf1ve
50%
50%
mhhf1ve,
User Rank: Light Sabre
4/10/2014 | 4:30:09 PM
Re: T-Mobile stole me away from Verizon

I guess most importantly (assuming the service has been on par for you), is it a lot cheaper now?

It's significantly cheaper, but more importantly, t-mobile's "unlimited" plans make its bills much more consistent for me. When I was with Verizon, my bills would fluctuate wildly depending on "overage" costs -- if I exceeded my alloted bucket of minutes per month, I'd have to stop using my phone... or pay an extortion-like per-minute rate for my voice calls until the end of my billing period.

SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/10/2014 | 3:52:20 PM
Re: T-Mobile stole me away from Verizon
Hah, that's a pretty good analogy. I guess most importantly (assuming the service has been on par for you), is it a lot cheaper now?
mhhf1ve
50%
50%
mhhf1ve,
User Rank: Light Sabre
4/10/2014 | 3:21:39 PM
T-Mobile stole me away from Verizon
Verizon has a lot of factors going for it -- its network reach is hard to beat, so while I was with Verizon, I almost never had no signal or a dropped call. However, VZW's prices are pretty easy to beat, and that's what got me to switch to t-mobile.

So far, I'm not so sure that "uncarrier" means what they say it means. T-mobile has certainly tried to make its customer service not suck like other carriers, but in the end, I don't think it's *that* different from its competitors. It's not like the difference between Tesla and the Big3 automakers. It's more like the difference between a local pizza restaurant and Pizza Hut.... 
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/9/2014 | 11:05:16 AM
Re: More fun with numbers
You mean you felt compelled to call in because of seeing that commercial, or they actually called you? Either way, good to see their marketing is working!
dstehle
50%
50%
dstehle,
User Rank: Light Beer
4/9/2014 | 11:00:47 AM
Re: More fun with numbers
Actually, they did reach out to me. AT&T has been flooding the TV networks with this ad:

 

http://www.youtube.com/watch?v=njENamous08

 

David

 

 
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/9/2014 | 10:52:43 AM
Re: More fun with numbers
That's nice that you were able to change without a contract, but frustrating they didn't proactively reach out to you to suggest it! I guess that is asking too much...
dstehle
50%
50%
dstehle,
User Rank: Light Beer
4/7/2014 | 2:20:42 PM
Re: More fun with numbers
I have 9 people on my AT&T Family Plan. Before last week, I was paying $30 per line with a $120 10Gb dataplan - $390 before tax.

I called in after seeing all those "Yup, yup, yup" commercials and I was pleased to get new pricing without having to sign up for a new contract. $15 per phone and a 15Gb data plan for $135 - $270.

A nice $120 delta.

I notice that Verizon has not matched this yet.

 

David
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
4/7/2014 | 1:22:06 PM
Re: More fun with numbers
I have a hard time seeing any changes in wireless subscriber pricing. 

We can all sit around and complain about how expensive monthly fees are. But the reality is that we're all going to continue paying those fees.

It's expensive on an infrastructure and operating level for wireless companies to do all of this while making a profit. Actually, I think companies like Verizon make a whole lot more on the business side than anything else. 

Ultimately, I like how T-Mobile is trying to positiion itself as a consumer friend in the industry. But I have a hard time seeing how the company will actually cause long-term distruption or change for consumers. It's the same product just packaged slightly different. 
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
4/6/2014 | 6:46:39 PM
Re: Ups n Downs
The numbers aren't always going to add up when company PR folks put out their version of how great they're doing. But, it's still hard to keep customers satisfied and ironically sometimes hard to get them to jump ship to another company, adding to the difficultiy of predicting customer behavior and thus indivitual company profits.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/4/2014 | 2:05:43 PM
Clarification from Craig...
Moffett was in touch to clarify that he believes the estimates what is off base. He writes:

 "The point we were making is that the estimates reflected in T-Mobile's survey are probably simply wrong; they have come up for T-Mo but have not yet come down for everyone else, and are therefore likely much too optimistic for the industry as a whole...We meant that other forecasters aren't yet reflecting that T-Mobile IS taking subscribers, and that their forecasts are therefore simply wrong. Similarly, we didn't mean that churn hasn't gone up for everyone else, as you suggest.  We meant that forecasts don't yet reflect the fact that churn has undoubtedly gone up, and, again, are therefore simply wrong."
Page 1 / 3   >   >>
Educational Resources
sponsor supplied content
Educational Resources Archive
More Blogs from Light Reedy
Despite the launch of its new Passport smartphone, BlackBerry needs to embrace a future that's in M2M, messaging and enterprise services.
Vodafone's Dr. Alan Law talks to Light Reading about virtualization, backhaul, SON and more after being appointed chairman of the Small Cell Forum.
Wireless operators are jumping on the mobile music bandwagon, a move that sounds good for many reasons.
The worlds of tennis, fashion and wearables collide as Ralph Lauren and OMsignal turn a polo into a sensor to track your every movement.
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.
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Roku Raises $25M, But for What?
Mari Silbey, Independent Technology Editor, 10/23/2014
AT&T: Merger Review Halt Won't Hurt Us
Alan Breznick, Cable/Video Practice Leader, 10/23/2014
Like Us on Facebook
Twitter Feed