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 Nextel released fourth quarter and full-year 2011 results this week, wrapping up the financial reporting for the nation’s three largest wireless operators and highlighting an interesting fact about the industry: people like Apple’s iPhone.
Sure, that is not really a surprise, but with now three of the nation’s top four carriers offering the device, the impact it’s having on the market is growing … funnier.
Prior to 2011, AT&T Mobility was the lone domestic outlet for the iPhone and thus was able to reap all the rewards that came along with that. You know, rewards like the fiscal burden of having to subsidize the nation’s thirst for the iPhone and having its network mocked for not being able to support all of those customers. Rewards.
Now, with three nationwide operators offering the device, Apple was able to post a record number of domestic sales for the latest version that launched conveniently the day the fourth quarter started. And with that, all three carriers were forced to report the financially-crippling impact that device is having on their bottom line.
Sure, carriers want to carry devices that people want to buy, but the cost of subsidizing those devices to a price point that will attract customers is making the financial people nervous. I know we all know that these short-term financial “baths” are supposed to pay off in the long term by having customers tied to a long-term contract that includes mandatory data packages, but with the iPhone now in its sixth year of existence, that pay off keeps getting pushed back.
This seems to be an issue with Apple releasing a new version of the device on a yearly basis that in turn is seeming to drive consumers to feel the need to buy a new model every year. Carriers have tried to remain steadfast in their attempts to require customers to not receive a full discount on those yearly upgrades, but all it takes is one player to fold and the rest follow.
Carriers have also tried to deflect some of the attention from the iPhone by rolling out appealing smartphones running alternative operating systems. However, to this point it seems few people would be willing to purchase anything but an iPhone if given a chance.
This iPhone life cycle issue has also drawn comments from financial analysts who questioned AT&T’s assertion that it expects flat smartphone sales this year.
“In our view [AT&T] has attempted to deflect some of the attention away from its operational and strategic challenges in wireless,” noted Macquarie Equities Research in a research note. “AT&T has made its bed with the iPhone and its assumption of flat iPhone sales in 2012 does not seem credible to us. We’d have confidence in Apple’s ability to grow at [AT&T] with the iPhone 5 expected to launch in July. … Our AT&T iPhone model suggests that AT&T ended 2011 with 27.9m iPhone subs up from 22.1m at the end of 2010. Given the higher installed base, we believe that T will ship sharply more units in 2012 than 2011.”
While this report focused on AT&T, it would be wise for those operators that have only recently received the iPhone to take notice of what their future might hold.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
— One sad(er) side note from Sprint Nextel’s results this week was the continued push to turn off its iDEN network post haste. I know this is not really new news, but it sort of hit me this week that maybe, just maybe Sprint Nextel is really serious this time.
We have all witnessed the on-again, off-again feelings Sprint Nextel has had for its iDEN network ever since Sprint was hoodwinked into spending $35 billion on Nextel back in the day. But, now it seems that those feelings have cemented into the off-again, and for that I am a little sad.
Remember when push-to-talk was the only differentiator in the market and every carrier was throwing money at coming up with a way to compete in that space? Good times.
In memory of the days when PTT ruled the marketing airwaves:
–Another comment from Sprint Nextel’s quarterly results that seemed a bit odd:
“From 2008 to 2011, our wireless CapEx investments were approximately 1/3 the spend of Verizon, 1/3 of AT&T’s spend and 1/2 the spend of T-Mobile U.S.A.”
Is that really something to be proud of? Yeah! We spent half as much on our network as a carrier nearly half our size. Yeah!
–Those crazy Russians at wireless carrier MegaFon took the concept of unlimited data to the extreme, recently running a contest to see who could download the most content in a one-week period. The winner managed to gorge on 419 gigabytes of data using an HSPA+-enabled wireless modem, and in turn won themselves a paid vacation.
MegaFon claims that amount of data is the equivalent to 30 years of usage for a normal consumer and was equal to sending more than 400,000 pictures, streaming 400 movies or “millions” of e-mails.
–I was hoping to put off any reference to the upcoming Mobile World Congress event until next week, but figured this bit of information was something that needed to be shared ASAP.
It seems that transit workers in Barcelona are looking to strike during the event, which should cause more than the usual amounts of havoc for buses and subway operations across the city. GSMA, which is the acronym in charge of the event, said it was working with the local government to handle the situation, which I know puts my mind at ease.
–And finally a warning to those parents out there handing over smartphones to their kids. A Canadian couple was surprised by an $11,000 cellphone bill from SaskTel after their child found out how awesome that Netflix application was. Even better, much of that Netflix usage came while the child was roaming off of SaskTel’s network. Double whammy!
I welcome your comments. Please send me an email at dmeyer@rcrwireless.com.
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