Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Sprint this week brought to a close the latest round of quarterly financial reporting by the nation’s four largest operators, and with that we can now tear apart what exactly happened and what it all means.
The short answer: Everyone’s a winner!
Parsing through the results showed that every carrier had at least something to crow about, though the actual validity of that crowing is up for debate.
Looking at the results from 100 yards, there was really nothing new this quarter: Verizon Wireless and AT&T Mobility continue to be the big fish in a pond that, combined, they take up about two-thirds of; while Sprint maintained its No. 3 position (with an asterisk); and T-Mobile US continued to attract customers like flies to a magenta shirt.
But, moving in a bit closer you realize that every carrier managed to make progress in one way or another.
Verizon Wireless and AT&T Mobility were dinged by some for actually losing customers from the all-important smartphone segment, which typically generates higher monthly revenues due to current pricing models that charge more for smartphones to access services than other devices. These two carriers obviously have much larger smartphone bases in which to lose customers from and have for the most part kept their smartphone service pricing at a premium compared to their smaller rivals, thus the losses are not too much of a surprise.
However, while smartphone customers fled, both operators managed to attract a good portion of tablet and nontraditional devices customers. This is significant in that it plays into vendor and analyst predictions that in developed markets the real growth for mobile operators moving forward will come from “connected devices” and not from traditional devices like smartphones.
Sure, Verizon Wireless and AT&T Mobility may not be the destination of choice for new smartphone customers and also appear to be leaking price-conscious smartphone subscribers, but results show these two are making significant headway in the next-generation of market growth.
And just where are all those smartphone customers going? Why, they continue to flock toward T-Mobile US, which again led the industry in adding these high-paying customers who were attracted to T-Mobile US’ aggressive pricing – and perhaps that whole “un-carrier” marketing plan.
I guess by now no one should be shocked by T-Mobile US’ turnaround following AT&T’s failed attempt to acquire the carrier, which resulted a lost year that nearly doomed the market’s No. 4 carrier. A new management team focused – and boisterous – on not being just another wireless carrier has seen T-Mobile US become the domestic market’s most aggressive and feared rival. Some may not fully buy into all the hyperbole surrounding the carrier’s marketing moves, but no one can deny its effectiveness, especially in the smartphone space.
But, what about the future?
Some might argue that T-Mobile US’ focus on the broader market has left it a bit thin in growing new segments. The carrier has attempted to extend its reach into the tablet and connected-device space, but so far seems to be lagging its larger rivals, or perhaps we are expecting too much from T-Mobile US in light of its runaway success in the smartphone space.
I am sure T-Mobile US’ management is not unaware of the issue and expect that its efforts will increase as it continues to expand the reach of its network. A lot of these new markets are somewhat reliant on broader coverage, which T-Mobile US and Sprint currently can’t offer when compared with Verizon Wireless and AT&T Mobility. But, I would suspect that gap to close to some extent, though full closure may have to wait until the 600 MHz auction.
Speaking of Sprint, even the market’s most picked-on carrier can at least claim some progress with its latest quarterly results. The operator added more than 1.2 million net connections during the quarter, which maybe managed to keep it as the market’s No. 3 operator in terms of customer base. (See previously mentioned asterisk.)
Like its larger rivals, all of its growth came from either nontraditional devices or services not labeled as “Sprint,” which some might say is sort of a loss. But hey, it remains on the podium!
Even better, Sprint CEO Marcelo Claure looks to be finding his voice. During the carrier’s quarterly conference call, Claure called out claims by T-Mobile US CEO John Legere regarding porting ratios, which T-Mobile US said it was seeing positive rates from all of its rivals.
“We have no idea how they get to the numbers that they quote,” Claure countered. “I mean, they are completely, vastly different than what we’re seeing.”
Claure’s comment might not be the most antagonizing, but it does show that perhaps Sprint is now willing to take on some of its challenges in the court of public opinion – i.e. sound bites – and even better, maybe Claure and Legere potentially sharing the stage at upcoming trade shows could provide some live sparring that would put recent sanctioned events to shame.
The strong quarter by all in at least some way also sets up a juicy competitive environment going forward, with analysts expecting Verizon Wireless and AT&T Mobility to use some of their might in an attempt to put the squeeze on the smaller guys. If that does indeed come into play, I guess we can add cynical reporters to mix of winners.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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