& cplSiteName &

T-Mobile Not Stealing Customers… Yet

Sarah Thomas
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&T’s has increased 3 bps, Sprint’s, 8 bps, and T-Mobile’s fell by 4 bps. Street estimates, in other words, seem to imply that the TMUS’s subscriber gains are largely coming out of thin air, and that the big four’s 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        ADD A COMMENT
<<   <   Page 2 / 3   >   >>
RitchBlasi
50%
50%
RitchBlasi,
User Rank: Light Sabre
4/4/2014 | 12:27:09 PM
Ups n Downs
Yeah mendyK, being Italian and coming from Brooklyn, that meant something else for me too.  :-)

I wonder if the big swing into postpaid could also be a result of adding a new family member onto a family plan instead of going for a pre-paid option.  At around $40 a person, the postpaid plans are rivaling those of MVNOs.  It always amazed me how carriers came up with their numbers, how each might have arrived at them differently, and how analysts projections were always a bit off based on a number of unknowns.  Maybe someone should come up with standards for reporting - like coming up with standards for NFV, LTE, yada, yada, yada.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/4/2014 | 11:35:56 AM
Re: Sprint fires back
"Family terminaton fees" -- that means something different where I come from.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
4/4/2014 | 11:11:17 AM
Sprint fires back
Like I said, moves are being made on a nearly daily basis. Sprint just fired back, matching T-Mo's offer to pay family termination fees up to $650.

Legere immediately shot back on Twitter (matching your point, mendyk) that T-Mobile's offer is for life, while Sprint's is just a one-time promotion to lure/trick you. Frucked up, he says.

http://s4gru.com/index.php?/topic/5721-sprint-to-pay-etfs-for-a-limited-time/
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
4/4/2014 | 9:25:39 AM
Re: More fun with numbers
True, and even though it's starting to affect subscriber numbers, it hasn't affected the financials of AT&T or Verizon at all, so there's little incentive for anyone but probably Sprint to do so.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
4/4/2014 | 9:25:38 AM
Re: More fun with numbers
True, and even though it's starting to affect subscriber numbers, it hasn't affected the financials of AT&T or Verizon at all, so there's little incentive for anyone but probably Sprint to do so.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/4/2014 | 9:22:52 AM
Re: More fun with numbers
Sustainability comes down to acceptable profit margins, and also has to take into account corporate factors like debt service. Every company's margin requirements are slightly different, but within a specific industry they tend to aggregate at a more or less common point (at least for the publicly traded companies). That's why it's hard for me to see any effort to differentiate on price as more than a temporary and incremental strategy. But I'm not a multibillionaire with a messiah complex.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
4/4/2014 | 9:09:40 AM
Re: More fun with numbers
I think the tradeoff of lower prices for poorer quality or some other kind of caveat is something a lot of US wireless users have proven they are willing to make. A number of MVNOs are basing their business on that kind of model. It may always be a niche play, but I think we'll see more business model experimentation. 

And, you're right, flying used to be so much cheaper! Now it's not only more expensive, but a pain with delays and issues every single time. blurgh.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
4/4/2014 | 9:08:04 AM
Re: More fun with numbers
I understand that his outrage over the unfair wireless prices in the US is just posturing, but he'll have to make good on his promise of lowering prices if the acquisition goes through in some respect or another. What kind of changes in wireless pricing do you see happening that are actually sustainable?
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
4/4/2014 | 9:06:17 AM
Re: More fun with numbers
I think T-Mobile has copped a different attitude than AT&T and Verizon, but I'd say Verizon is the one that's been above the fray. It has responded to some of T-Mo's moves, including most recently with its Share Everything adjustments, but so far has just ignored it or dismissed it as an annoying pest. AT&T has given in a bit more. At any rate, it's been fun to watch!
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 2 / 3   >   >>
More Blogs from Que Sera Sarah
WiC congratulates the winners of our inaugural Leading Lights awards: Cisco's Yvette Kanouff, Zayo Group's Sandi Mays and startup Grid4C.
Leaders from Mellanox, Arista Networks, Syniverse, ECI Telecom and Cisco round out WiC's inaugural female tech pioneers of the year.
Women from AT&T, Ciena, Ixia, Zayo Group and Fujitsu make our shortlist for working to advance the cause of women in the next-gen comms industry.
Join WiC and Flex's Caroline Dowling for a live radio show on Tuesday at 12PM ET on how technology is powering the fourth revolution and to what effect in the future.
New companies with a focus on video graphics, smart grid predictive analytics and a quadcopter camera make up WiC's finalists for Female-Led Startup to Watch.
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
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
Energy 2020: Growing Services, Not Consumption

6|24|16   |   07:18   |   (0) comments


Management of power requirements needs to be a key consideration as cable operators deploy new services, says Dan Cooper, vice president of critical infrastructure for Charter Communications and chair of the SCTE/ISBE Standards Program's Energy Management Subcommittee. In this video, Cooper discusses the importance of cable operators and technology partners ...
LRTV Huawei Video Resource Center
Huawei & TDC First to Launch DOCSIS 3.1 Trial in Europe

6|24|16   |     |   (0) comments


To meet the rising demands for high-speed broadband and to tackle fierce competition for 1.5 million household, TDC wanted to upgrade its network to use the latest technology. Using Huawei's DOCSIS 3.1 solution, TDC is now able to offer gigabit speeds to its customers.
LRTV Documentaries
OPNFV Summit: Key Takeaways

6|22|16   |   03:28   |   (0) comments


MANO shortfalls, an increasingly bloated open source ecosystem and the cultural challenges for network operators were among the key takeaways from the OPNFV Summit in Berlin.
LRTV Huawei Video Resource Center
Bringing Ultra Broadband to the South Pacific

6|22|16   |   7:55   |   (0) comments


At Singapore's UBBS 2016 summit, Light Reading speaks to Lim Chee Siong, Huawei's CMO in the South Pacific Region.
LRTV Custom TV
Juniper's NFV Platform

6|22|16   |     |   (0) comments


A telco cloud is a key enabler for service providers to deliver virtualized services to their customers. Juniper has a differentiated approach with an open and comprehensive NFV platform to build the cloud of the future for multiple use cases.
Women in Comms Introduction Videos
Infinera: The Glass Ceiling's Been Broken

6|22|16   |   4:34   |   (0) comments


Shannon Williams, an engineer by trade and now the director of sales for Infinera's major accounts, draws confidence from being a female in a male-dominated industry and hopes other women will too as industry dynamics swing in our favor.
LRTV Custom TV
RAD Demonstrates SD-WAN Functionality at BCE 2016

6|22|16   |     |   (0) comments


In conjunction with Versa Networks, RAD demos a joint solution for SD-WAN implementation. The solution uses RAD's ETX-2i, a vCPE platform integrating a powerful IP and Carrier Ethernet NID/NTU with a field-pluggable x86 NFV module that runs Versa's FlexVNF for SD-WAN functionality. The demo implements SD-WAN over a simulated service provider footprint by deploying ...
LRTV Custom TV
Radware on Virtualizing Network Security

6|21|16   |     |   (0) comments


Radware's Michael O'Malley highlights the benefits for service providers of virtualizing network security.
LRTV Huawei Video Resource Center
Huawei 2016 UBBS World Tour: Singapore

6|21|16   |   02:39   |   (0) comments


Highlights from Huawei's UBBS World Tour event in Singapore.
LRTV Custom TV
The FlowBROKER Solution

6|21|16   |     |   (0) comments


During a demo at the Big Communications Event 2016, Accedian director of product line solutions Greg Spear demonstrates how the FlowBROKER distributed packet capture solution (part of Accedian's SkyLIGHT platform) can be used to troubleshoot and resolve QoE issues.

FlowBROKER is the industry's first lossless remote packet capture solution, which uses ...

LRTV Documentaries
BCE 2016: Dell & the New World Order

6|21|16   |   22:48   |   (0) comments


Dell's Jim Ganthier on how the very essence of enterprise is being affected by digital disruption – and how the cloud can help companies find a path forward.
LRTV Documentaries
BCE 2016: The CSP of the Future

6|20|16   |     |   (0) comments


Traditional telecom operators have been adopting new ways of doing business from the IT sector and emulating web-scale companies in their technology adoption. Are these strategies succeeding? A panel of experts at BCE considered the evidence...
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
FCC to Vote on 5G Spectrum on July 14
Dan Jones, Mobile Editor, 6/20/2016
'Brexit' Vote Hits BT, Vodafone
Iain Morris, News Editor, 6/24/2016
Twitter Buys Magic Pony... Not That Kind
Mari Silbey, Senior Editor, Cable/Video, 6/20/2016
AT&T Settles on LTE for Cellular IoT
Dan Jones, Mobile Editor, 6/22/2016
Google Fiber Buys Webpass in Wireless Play
Iain Morris, News Editor, 6/23/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
At the BCE 2016 show in Austin, ECI Telecom CEO Darryl Edwards tells Light Reading founder and CEO about the Elastic Network concept and the company's NFV and cybersecurity developments.
Mark Dzuban, president and CEO of SCTE/ISBE, sits down with Steve Saunders in Light Reading's New York office to discuss the society's Energy 2020 campaign, including its mission to benefit the environment, enable economic benefits and the key challenges facing cable operators wanting to reduce energy consumption.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.