Has customer growth peaked? : Q1 numbers from nation’s top carriers show signs

With domestic wireless penetration nearing 80%, signs of slowing customer growth may be beginning to show.
The nation’s four largest carriers brought in fewer customers in the first quarter of this year than in the same quarter of the past three years, posting about 4.1 million net customer additions this year.
During the last five years, the numbers peaked in 2006 with the top four carriers bringing in 5.7 million net additions in the first quarter. The 2007 figure was roughly on par with 2004’s 4.2 million net customer additions.
It’s probably too early to tell if the dip in growth is just a temporary blip or evidence of a plateau for industry growth, but the next few quarters should shed light on the situation.
“I don’t really think it’s a blip. I think high penetration is definitely starting to kick in in the market,” said Current Analysis analyst Weston Henderek. Even so, Henderek added, the industry “still has a ways to go” in terms of growth.
“There’s definitely going to be some leveling off,” Henderek said. “I don’t think you’re going to see big drop-offs, but you’re not going to see the kind of never-ending increases like you did . when the market penetration was still relatively low.”
Henderek added that the slowing growth will probably be more apparent among coveted postpaid subscribers, and that carriers are expected to focus more on offerings to prepaid customers in spite of less attractive revenues and stickiness.
Ken Hyers of Technology Business Research Inc. noted that although the net addition figures may not yet reflect a long-term trend, operators are already dealing with the fact that most of their customers are coming from other carriers instead of being new to wireless, as well as paying more attention to the strategies of niche players such as Leap Wireless International Inc. and MetroPCS Communications Inc.
“It shouldn’t be a surprise to anyone. We’re definitely hitting a point where penetration is getting up toward the ceiling,” Hyers said. In the U.S., he added, “I don’t know if it’s realistic to see the 95% or 100% or 115% penetration like you see in some markets.”
Slowing growth due to high penetration, he added, “is going to happen. It’s definitely happening now, the question is, how strong is it and if it’s not making any major impact yet, [it will] very soon.”
Operators have been shifting strategies accordingly, beefing up their marketing of products and data services, which not only contribute to revenue growth, but might be used as incentives to retain customers.
Not all of the national operators are being affected equally. Verizon Wireless posted 1.7 million net additions in the first quarter, equal to its first-quarter 2006 performance-which was the company’s best first quarter in the past five years. Meanwhile, customer additions for the other three national carriers fell year-over-year.