If we asked who the winners in wireless on the handset side eight years ago were, we would have said BlackBerry and Nokia. Today’s leaders are Apple iPhone and Google Android on phones like the Samsung Galaxy. The wireless world completely changed over the last few years. So what can we expect on the network side going forward?
Things change quickly on both the handset and network sides. Yesterday’s leaders are now struggling for survival. While Apple, Google and Samsung have roughly 90% market share, all the others squeeze into the last 10%. Today the next largest is Microsoft Nokia, which has only single-digit market share. BlackBerry has roughly 1% from what I hear.
Changes at the networks
With that kind of transformational change going on with handsets, let’s consider the networks.
Networks have gone through as much chaos and change, as well. Ten years ago the competitors were AT&T Mobility, Verizon Wireless, Sprint and T-Mobile US. They were all going through changes and challenges, but they were all competing well in the 2G, pre-app world.
Then, over the next few years, things started to change. AT&T Mobility and Verizon Wireless continued to grow to 3G then LTE, while Sprint and T-Mobile US didn’t. That meant two competitors were rapidly growing while the other two were not.
Now the wireless world is changing once again. Growth will come from new and different areas. AT&T Mobility and Verizon Wireless are still on the right track, but now it seems so are Sprint and T-Mobile US. What that means is all four are growing, but in different ways.
What’s important to remember is there is a split forming in the industry. Both AT&T Mobility and Verizon Wireless are on one side of this split. They offer a variety of wireless and wireline services. On the other side is Sprint and T-Mobile US, which are straight wireless plays.
So what changes can we expect going forward with wireless networks? Let’s take a closer look at these top four carriers.
AT&T master brand
Ten years ago AT&T was changing. It was regrouping after the enormous acquisition campaign it just went through putting AT&T, SBC, BellSouth and Cingular under one master brand.
To AT&T the master-brand philosophy was an incredibly important part of its growth strategy: It had several different companies in several different business areas, which took years to successfully blend under the master brand. These categories’ are wireless, wireline, television, Internet and more.
Then, roughly eight years ago, AT&T won the first and exclusive Apple iPhone contract, setting them apart from their competitors. Year after year AT&T had this incredible competitive advantage being the only competitor with the iPhone. This propelled the company with rapid growth.
This set AT&T apart from, and even above, its competitors for years. Several years later, when the iPhone spread to every other competitor, AT&T lost that exclusivity and many thought they would be hurt. However, AT&T has only kept growing. It has potentially the lowest churn rate among all competitors. So the naysayers were wrong.
I think AT&T will continue to grow the same way, in different areas, going forward. It is the most aggressive at expansion compared to the others, moving into many new business sectors. We have seen it grow its telephone business to wireless, television with U-verse, Internet and more.
Now the company is moving into many new areas for growth: home automation and security and helping other industries bring wireless into their products, such as automotive, health care, retail and much more. The company also is expanding into Mexico and nationwide television with the pending DirecTV merger.
So going forward, AT&T will remain a leader, driving the industry in new directions. It continues to show strong growth in traditional and new areas, which will expand who it is going forward. This is great news for AT&T, its workers, customers, partners and investors.
Verizon also growing strong
During the last several years, while it has not been as aggressive, Verizon Communications has been growing strong on the wireless and wireline sides, just like AT&T. However Verizon is not first with market opportunities.
Verizon is a follower, not a leader. It follows the direction created by others in the industry.
However, while Verizon is not a leader, it is still successful and a strong competitor. The company is actively moving, growing in areas like wireless, telephone, television with FiOS, and the Internet.
While it is not moving into new business segments as aggressively as AT&T, I believe Verizon will continue to follow AT&T and continue to show growth. It is just not the locomotive of this train.
Sprint is waking up
The No. 3 wireless player, which got off track several years ago with the Nextel Communications acquisition, has finally begun to awaken. Sprint has spent the last few years upgrading its network and now offers the best quality and speed in a growing number of markets nationwide.
Sprint still has a way to go, but it seems to be catching the growth wave, which is very good to see. The carrier’s speed, quality and reach are all improving on a regular basis.
Sprint is under new leadership and is still rebuilding, but it is making real progress. The company’s recent sales programs like “Cut Your Bill In Half” have been successful and I look forward to following Sprint as it continues to reemerge onto the marketplace.
T-Mobile US recovery
The T-Mobile US recovery has been another remarkable victory for a competitor that was failing just a few short years ago. Because its speeds were slow and its quality and reach was terrible, it was failing.
Then the new CEO came in and started to change everything about T-Mobile US. These changes meant T-Mobile US would either sink or swim. Bottom line, it is swimming.
T-Mobile US has been recovering over the last two years and it looks like the carrier will continue to do just that.
However, the question is: How long can T-Mobile US stay on this track? Executives at T-Mobile US owner Deutsche Telekom have complained that the current track is losing money and cannot be kept up on an ongoing basis.
Because of that and other things, the ability of T-Mobile US to continue this level of success is in question.
For now, though, T-Mobile US is winning with the youth community and is improving the quality of its network in many markets nationwide. Rebuilding takes time and money, so in order to rebuild, it’s helpful if the company is winning customers.
T-Mobile US seems like it is now on the growth side of the wave once again. That’s good. It will be interesting to see how long it can keep up this pace, and what happens next at the company.
Bottom line
The bottom line is simple. The wireless industry in the U.S. is stronger than ever and regularly changing – every few years. The last major shift was to the iPhone and Android. The next major shift has begun and the growth tracks of the four big wireless players are all similar, but very different.
AT&T and Verizon are a combined wireless and wireline company and Sprint and T-Mobile US are wireless only. There are plenty of growth opportunities on both sides and all four players are now in the growth mode.
However, we may have to consider judging the two sides differently going forward – just a thought – so the state of growth in wireless is strong and expanding. Stay tuned.
RCR Wireless News columnist Jeff Kagan is a wireless analyst and consultant. Kagan shares his colorful perspectives and opinions on the companies and technologies that are transforming the industry he has followed for more than 25 years. E-mail him at jeff@jeffKAGAN.com.
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