Wireless Data Revenues Dip For First Time in Seventeen Years — Thanks To A Crazy Little Thing Called Competition
from the you-mean-I-don't-get-to-choose-when-I-get-to-compete? dept
We’ve noted for some time how T-Mobile’s crazy idea to be nice to consumers (well, if you exclude their attacks on the EFF and net neutrality) has been a great thing for American consumers. Thanks to more consumer-friendly policies, T-Mobile has been adding more subscribers per quarter than any other major carrier for several years running. This pressure recently resulted in both AT&T and Verizon being forced to bring back the unlimited data plans the companies had been telling consumers they didn’t actually want for years.
This added competition has really annoyed Wall Street, which has been grumbling about the shift back to unlimited plans for months. Wall Street had grown comfortable with the non-price competition in the wireless market, where plan pricing often obscured the fact that Americans pay more for mobile data than most developed countries. AT&T and Verizon used a lack of competitive pressure to kill off unlimited data plans in 2011, allowing them to introduce significantly more expensive metered plans — just as video consumption on mobile began to take off. For the giant incumbents, things were going swimmingly.
Of course as T-Mobile grew, improved its network, and fashioned its often brash and amusing new identity, it slowly but surely became a more viable competitor, forcing both companies to respond. And, just as Wall Street worried, the shift back to unlimited data is having a negative impact on cellular revenues. How negative? According to respected wireless industry analyst Chetan Sharma, cellular data revenues dropped last quarter for the first time in seventeen years. This was part of a number of firsts for an industry not-entirely-familiar with this whole competition thing:
US had a rough start to 2017 with several indicators turning negative for the industry:
The US mobile data services revenue has seen QoQ growth for 17 straight years until Q1 2017 when it saw its first negative growth for the quarter. (Q1 is generally a down quarter but for the first time the revenue growth dipped below zero). Verizon suffered its first ever decline in service revenues YoY. For the first time, the net adds for connected (cellular) tablets were negative. For the first time, the postpaid net-adds were negative (AT&T net-adds were impacted due to sun setting of the 2G network).
And while T-Mobile added 798,000 postpaid (month to month) subscribers, Verizon and AT&T saw a 289,000 and 348,000 postpaid subscriber reduction, respectively. Before you feel too badly for these industry giants, know that very healthy sector net income still managed to improve 13% overall as operators focused their attentions on other profitable markets (like the internet of things, ads and media, and smart cities), tightened their belts and lowered some expenditures.
Still, there’s little doubt this added competition has been of notable benefit to consumers, who still pay some of the highest prices on the planet, but are at least getting to touch the hem of what real competition is supposed to look like.
The problem: there’s no indication things will stay that way, and some indicators that things could reverse course. The FCC is busy gutting all consumer protections in belief that blind deregulation magically results in telecom utopia, ignoring that this has the opposite intended impact on less competitive markets (especially fixed-line broadband). And there’s also every indication that these same regulators are keen to approve Sprint’s planned acquisition of T-Mobile, a deal that would reduce the number of players in the space, likely putting an end to this pesky flirtation with competition in fairly short order.