dslreports logo
site
spacer

spacer
 
   
spc
story category
Wireless Subscriber Growth Slows Significantly
Carriers Face New Challenges in Keeping Revenues High
by Karl Bode 08:32AM Tuesday Nov 13 2012
The wireless market is finally starting to reach its saturation point, with last quarter's subscriber growth being the slowest in over a decade. According to a new report by Chetan Sharma consulting, last quarter saw the industry add 2.4 million subscribers, the lowest total since wireless telecommunications starting to soar in the nineties. The growth was primarily thanks to the strong postpaid subscriber growth by Verizon, while both T-Mobile and Sprint saw postpaid user declines. 2 million of the new subscribers added were prepaid users, a market that we've already noted is growing at a much faster rate thanks to the fact carriers there are actually trying to compete on price.

Click for full size
Carriers have been fortunate in the States to so far avoid the downtick in instant messaging seen overseas, but the loss of this revenue is inevitable. Carriers are already trying to compensate for the death of voice minutes and SMS revenue with new shared data plans (essentially price hikes), but as subscriber growth slows Sharma notes that carriers are going to have to find some new tricks to keep revenues up and please investors:
quote:
In Q3 2012, for the first time, there was a decline in both the total number of messages as well as the total messaging revenue in the market. It might be early to say if the decline has begun or the market segment will sputter along before the decline takes place. As we had outlined in our fourth wave paper, once the market segment reaches the 70-90% penetration mark, the decline begins and we might be seeing the start of the decline in messaging revenue. The decline is primarily due to the rise in IP messaging and operators have been slow to evolve their strategies in the segment.
We've already seen several unpopular ideas grow out of this concern, such as trying to charge content companies extra to be able to advertise their content won't count against caps, to charging customers more for using particular content. The collision between net neutrality interests and the desire to keep massive revenues afloat will create some significant strain over the next few years.

view:
topics flat nest 

ITALIAN926

join:2003-08-16
kudos:2

2 recommendations

yawn

When every person has a cellphone , what is expected to happen? Wireless will only grow with increased population. This is supposed to mean that there is a cellphone extinction on the horizon? I really dont understand the fuss about new CHALLENGES.

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: yawn

said by ITALIAN926:

When every person has a cellphone , what is expected to happen? Wireless will only grow with increased population. This is supposed to mean that there is a cellphone extinction on the horizon? I really dont understand the fuss about new CHALLENGES.

Yes. Every person in the US over the age of 8 now has a cellphone already. And many have more than 1 device. Where do they expect continued growth to come from? The only sales now will be for replacement devices.
--
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Inevitable

Eventually the market for cell phones would be saturated. This basically means there will be no reductions in price from here on in because there are no more new customers to be wooed into getting cell phone service because it is cheap.
--
USA 2012 - the mooches won.

kapil
The Kapil

join:2000-04-26
Chicago, IL

Re: Inevitable

Actually, it probably means the exact opposite. With no low hanging fruit left to be had, carriers will turn on each other and compete on price, service levels etc. because that is the only way to poach customers and grow.

AT&T's iPhone exclusivity and Verizon's short lived LTE dominance were probably the last examples of provider differentiation....with all networks being largely the same and all carriers having equal access to most popular devices, customers will go where the lowest price is.....that's why you see VZW spending so much marketing money trying to carve out a niche based on network quality
--
»www.kapilville.com
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:1

Re: Inevitable

In general, I would tend to agree with you but since the two biggest carriers seem to be in lock-step with each other, I think they know they can raise prices in unison. If two companies are on equal footing, a price war is disadvantageous to both of them. Smaller carriers (Sprint, Tmo) will try to undercut the big boys' pricing though.

spewak
R.I.P Dadkins
Premium
join:2001-08-07
Elk Grove, CA
kudos:1
Reviews:
·SureWest Internet

Re: Inevitable

said by CXM_Splicer:

In general, I would tend to agree with you but since the two biggest carriers seem to be in lock-step with each other, I think they know they can raise prices in unison.

Now to add revenue, the big boys will charge you for using your own phone to connect to your own wifi network (or any free wifi network). Imagine if you will, a day when you arrive at home and turn off 4g and turn on wifi and you get a limited amount of data before you have to pay. I know, sounds ludicrous, but one can never underestimate the big carriers and their insatiable need for profit.
--
Romney becomes "the" Epic Failure!

buddahbless

join:2005-03-21
Premium
Reviews:
·AT&T DSL Service
·Verizon Online DSL

1 edit

Re: Inevitable

said by spewak:

said by CXM_Splicer:

In general, I would tend to agree with you but since the two biggest carriers seem to be in lock-step with each other, I think they know they can raise prices in unison.

Now to add revenue, the big boys will charge you for using your own phone to connect to your own wifi network (or any free wifi network). Imagine if you will, a day when you arrive at home and turn off 4g and turn on wifi and you get a limited amount of data before you have to pay. I know, sounds ludicrous, but one can never underestimate the big carriers and their insatiable need for profit.

SPEwak I agree..
Its sort of already in its childhood years and being implemented, ATT DSL/Uverse "Data Caped" with overages, Comcast "data caped", charter & optimum voice "caped", once Verizon follows suit game over, all the smaller incumbents will as well. It would be one thing if the ISP decided to throttle your home connection after a certain amout of usage and you had an option to pay a little extra to reinstate full speed, but they all went straight to charging for overages with no other option and thats the bottom line fact.

Now as for this article The market was know to go bust as its true the majority of those who wanted cell phones already have them. there new target market are the preteens, teens and teens as they reach adulthood when they reach 18 there will be your next influx of possible postpaid subscribers. The funny part is that generation is pretty wise to the tech dramas that are unfolding and a majority of them are going prepaid already because there under 18 currently and can not get a contract so they would rather stay with prepaid when they hit 18 (if it ain't broke dont fix it) Thats pretty much the only place for growth in the next few yrs as the immigration growth has slowed tremendously, so theres no money to be made there.

dennismurphy
Put me on hold? I'll put YOU on hold
Premium
join:2002-11-19
Parsippany, NJ
kudos:2

Re: Inevitable

Optimum is not capped.

88615298
Premium
join:2004-07-28
West Tenness
said by kapil:

AT&T's iPhone exclusivity and Verizon's short lived LTE dominance were probably the last examples of provider differentiation....with all networks being largely the same

Is that a joke? Even once all the top 4 carriers have 4G in place in many areas( such as mine ) your choices will be at&t and Verizon. So please do not say ALL networks are largely the same.

buddahbless

join:2005-03-21
Premium
Reviews:
·AT&T DSL Service
·Verizon Online DSL

Re: Inevitable

said by 88615298:

said by kapil:

AT&T's iPhone exclusivity and Verizon's short lived LTE dominance were probably the last examples of provider differentiation....with all networks being largely the same

Is that a joke? Even once all the top 4 carriers have 4G in place in many areas( such as mine ) your choices will be at&t and Verizon. So please do not say ALL networks are largely the same.

I do believe however I could be wrong that Kapil was referring to Major metro areas as Truthfully once all 4G (LTE) networks are in place by 2013-14 it will be hard to differentiate one from the next. though I do have to agree with BF, certain areas (mostly rural) ATT/Verizon will still be your only choice, unless some type of new national roaming agreement comes into play however I doubt seeing ATT or Verizon willing to strike deals with TMO and Sprint once LTE is rolled out. Hell, ATT and Verizon are already using two different ends of the 700 band just to try and avoid roaming between the two of them.

There is a big factor that a lot of people missed in this article, out of the 2.4 million subscribers 2 Million went to prepaid only 400k to postpaid. thats a huge market thats looking to be catered to. This should mark a turning point for the smaller guys TMO/Sprint especially to really start marketing some really competitive prepaid offers and features, Sprint could start a real BYOD scheme and drop the tethering fees. TMO to raise there throttle ( say up to/around 512kbps respectively ) and show off that even @ throttled speeds you can still Pandora & slacker with no buffering issues,watch regular quality youtube and news clips in real time, and Map software dependent on a data connection (google Maps) will work and be able to keep up with while your on the road. That would make for a huge selling point.

morbo
Complete Your Transaction

join:2002-01-22
00000
Reviews:
·Charter
said by kapil:

.....that's why you see VZW spending so much marketing money trying to carve out a niche based on network quality

You mean Verizon investing in actual infrastructure instead of marketing b.s.? Verizon is expensive, but their network is solid.

cork1958
Cork
Premium
join:2000-02-26

Re: Inevitable

said by morbo:

said by kapil:

.....that's why you see VZW spending so much marketing money trying to carve out a niche based on network quality

You mean Verizon investing in actual infrastructure instead of marketing b.s.? Verizon is expensive, but their network is solid.

Verizon was the worst wireless company I've ever used out of 4! Wouldn't use them again in a million years!

Not to mention I DESPISE big conglomerates and will do my best to go with the small guy.
--
The Firefox alternative.
»www.mozilla.org/projects/seamonkey/

JasonOD

@comcast.net

I don't think it will matter much......

As carriers have successfully made the switch to data usage billing. Which sets us predictable and steady revenue increases coming from riding the usage curve and creating additional LTE focused products over the next decade.
openbox9
Premium
join:2004-01-26
japan
kudos:2

Re: I don't think it will matter much......

Bingo. Subscriber stagnation is of minimal consequence if there are now subscribers left to be had. Growing revenue is what matters most and I believe the carriers have positioned themselves well for that goal.

jseymour

join:2009-12-11
Waterford, MI

Was Predictable and Predicted

Earlier in the year several industry analysts observed that most people who wanted a cell phone had one, that most people that wanted a smartphone had one, and that the market would essentially reach saturation sometime around 2013, so this should come as little surprise.

Never mind that, political hacks' and the dominant "news" media's claims to the contrary, the economy is weak, the prospects for it growing are not good and, in fact, it's balancing on the edge of another recession. Most people instinctively know this, and are cutting back.

Jim
tom thomas

join:2010-11-04

lower prices now ?

hopefully this means a hift to more competition in two desperately needed areas:

total monthly cost

data bucket size per dollar

i wil love it if this turns into a good old fashioned price war
osravens

join:2011-01-26
Cumberland, MD

Re: lower prices now ?

It won't turn into a price war. Why else do you think they lock you into contracts? It was never to benefit you.

buddahbless

join:2005-03-21
Premium
Reviews:
·AT&T DSL Service
·Verizon Online DSL

1 edit

Re: lower prices now ?

said by osravens:

It won't turn into a price war. Why else do you think they lock you into contracts? It was never to benefit you.

Semi agreed the only price wars will be in the prepaid sector if there are to be any price wars. It could turn into a "non-calling features & extras wars" where the price stays the same but features and extras ( IE: more or faster data, free Apps and offers) will now be added in for no cost. Similarly it has happened before with Long distance, caller ID, 3 way, voice mail, etc... Remember when we had to pay extra for those features?
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
said by osravens:

It won't turn into a price war. Why else do you think they lock you into contracts? It was never to benefit you.

Of course it benefits you. Who pays the actual price for their "smart" phone purchase?

Ebil1

@mycingular.net

How to grow 101

Now for evil AT&T to grow they need to offer enticements such as more Gigabytes.
The real money however will be made on the back end and their CEO is not smart enough to get it.

jmn1207
Premium
join:2000-07-19
Ashburn, VA
kudos:1

Re: How to grow 101

I'm sure we can expect to see price increases that will be justified by the "value-added" services and apps bundled with our devices that they will block from normal access.

antdude
A Ninja Ant
Premium,VIP
join:2001-03-25
United State
kudos:4

I am still not one.

However, I want wireless data plans that have no caps and cheap. I don't use voice due to my impediments.