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  | 
Oldest First  |  Newest First  |  Threaded View
Page 1 / 3   >   >>
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/3/2014 | 3:04:53 PM
Uncarrier moves
Going back through to add all those links on past T-Mobile moves reminded me just how much it has done in such a short period of time. A lot of its pricing changes were more about changing the structure and promotions, but there were also some significant price drops in there. It'll be interesting to see how the market continues to evolve in pricing and plans going forward. 
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/3/2014 | 3:07:24 PM
Next pricing trend?
Any thoughts on what the next big pricing shake up or trend will be? My money is on more toll-free/sponsored data-type partnerships.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/3/2014 | 3:28:16 PM
More fun with numbers
If churn is up at competitors but down at T-Mobile, doesn't that suggest that there's more than thin air at play? Also, the fact that competitors have lowered expectations for net adds while T-Mobile is increasing its net adds also indicates something positive is happening.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/3/2014 | 3:31:08 PM
Re: More fun with numbers
True, it's just not happening as much as you might expect yet. Adding 800,000 in total is still pretty good for the industry. It'd be lower if they were just trading customers.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/3/2014 | 3:40:28 PM
Re: More fun with numbers
The subscriber war of attrition is a less violent but equally pointless analog to trench warfare in World War I. Gain two points, lose three. Gain two back, lose one. Etc.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/3/2014 | 3:43:19 PM
Re: More fun with numbers
That could change with a real price war of the likes Son is promising. "Let's fight back! Let's fight back!"
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/3/2014 | 3:47:43 PM
Re: More fun with numbers
Winning customers through unsustainable pricing rarely works as a long-term strategy. So the question is whether there's enough real margin in current prices to sweat things down. I will guess that any too-good-to-be-true price plan will be exactly that -- a lowball bait price that will require a good portion of hidden extras.
TaraSeals
50%
50%
TaraSeals,
User Rank: Light Sabre
4/3/2014 | 4:51:56 PM
Re: More fun with numbers
I agree, Mendyk, and I also think that unlike long-distance or home phone service, wireless from an infrastructure perspective of course has a completely different cost structure, so the race to zero specter really isn't feasible. That said, my prediction is that going forward voice will always be the loss leader...while video and plans oriented around accessing video (to your point about app-oriented plans, Sarah) will become more and more attractive.

I think T-Mobile's genius  is in its positioning as being above the AT&T-Verizon fray; it's a little younger, a little hipper...and definitely has more whimsy than Sprint (and incidentally, that Framily campaign bothers me to no end--next thing you know it will introduce a multilevel marketing element).
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
4/3/2014 | 6:50:27 PM
Re: More fun with numbers
Agreed, Mendyk. 

 

The price wars of the airline industry were unsustainable, but the airlines though that was the best way to lure customers. They had plenty of customers, but also plenty of red ink. Now the airlines are making a lot of money -- at the customers' expense and inconvenience.

Airlines, telecom carriers and other businesses can only go so far with price wars. And cheaper (price) service usually means cheaper (quality) service.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/3/2014 | 7:23:50 PM
Re: More fun with numbers
We also should remember that Mr. Son lost a boatload of money in the first dot-com bubble. Fortunately for him, he had three boatloads, so no big worries. But his business decisions are not infallible.
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
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.
LRTV Custom TV
Exploring the Future of Cable Access

10|15|14   |   6:23   |   (0) comments


Cisco's Brett Wingo looks at where cable access architectures are heading, discussing the impact of DOCSIS 3.1, CCAP, Remote PHY, SDN, virtualization of cable networks and related technologies.
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
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
Forget the Internet, Brace for Skynet
Stephen Saunders, 10/15/2014
HBO Will Go OTT in 2015
Mari Silbey, Independent Technology Editor, 10/15/2014
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
Could Data Be the New 'Currency'?
Ray Le Maistre, Editor-in-chief, 10/16/2014
iPad Air 2 Lets Users Switch Carriers Any Time
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/17/2014
Like Us on Facebook
Twitter Feed