Wireless

by Karl Bode


Filed Under:
competition, mobile data, wireless



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.


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    • identicon
      Anonymous Coward, 22 May 2017 @ 6:58am

      "blind deregulation"

      There is nothing blind about this, and it is hardly deregulation either. The regulations solidifying legacy telecom's hold all over the place are still very much in effect.

      THIS is why there is a problem with the language. When regulations change in favor of consumers you like to call it "regulation" but when it becomes a disadvantage to consumers you like to call it "DEregulation".

      This is why people like me have to fight from an anti-regulation standpoint even though I do not disagree with all regulation. Because of this and your "sycophantic" word play along party lines the public will remain eternally confused and you NEVER win this fight because places like TD wind up fighting for the very people they are trying to fight against.

      You are being played by the Telco's because you have allowed them to set the language benchmarks. Here's another loaded gun, no need to take you foot out of your boots and shoe's... just pull the trigger already! Your feet should be numb since you have shot them so many times! But since you have an ideology to peddle you cannot be made to see reason!

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 May 2017 @ 7:25am

        Regulation vs non-Regulation

        "The FCC is busy gutting all consumer protections in belief that blind deregulation magically results in telecom utopia... "


        "All" consumer protections are being gutted ?? An extreme exaggeration.

        "blind deregulation" will not deliver "telecom utopia" ??
        What type of non-blind deregulation will deliver telecom utopia?

        (highly unlikely that TD favors any serious reduction in overall FCC regulatory power)

        ... lots of loose rhetoric thrown about in post, but the baseline political ideology shows thru...

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 22 May 2017 @ 7:53am

          Re: Regulation vs non-Regulation

          OMG, take your straw-man somewhere else and play it them over there.

          I never said consumer protections being gutted was an exaggeration of any kind. I am saying that I am tired of the language you guys use to combat it. You are ignorantly helping the telco's out instead of hurting them.



          Go back and read what I said again, you clearly understood none of it!

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 May 2017 @ 7:08am

      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 players in the space, likely putting an end to this pesky flirtation with competition in fairly short order.

      I get the sentiment here, but are we really working under the notion that Sprint is actually a competitor and not merely an option usually as an after though?

      I'd argue that their MVNOs (and MVNOs in general) are more of a competitor then Sprint is. Sprint tries to occupy the same space as T-Mobile or Verizon but come up way short. At least Boost mobile et al appeal to a different customer base with a different set of needs.

      A combine SprinT-Mobile could (COULD)allow them to reduce operating costs and increase coverage (without a lot of overlap), which might in turn improve the quality of the MVNOs thus making them better competitors to the big three.

      I get I'm the salmon swimming against the TD stream here, but in an industry with a finite amount of resources (spectrum) the key to competition isn't necessarily a large amount of players. I believe it's a good amount of viable players.

      /Rant over. I welcome constructive feedback. The potential for most insightful comment of the week is ripe in the responses here!

      reply to this | link to this | view in chronology ]

      • identicon
        Chuck, 22 May 2017 @ 8:37am

        Re:

        Given that T-Mobile is GSM and Sprint is, AFAIK, CDMA, any merger between the two offers zero technological advantage to either company. The only real advantage such a merger offers is purchasing several million user accounts - a benefit only the company will see.

        If you want to see this in action, find anyone who worked at a medium-sized construction company in the early 00's. Ask them how wonderful it was to have their instant walkie-talkie functionality. Ask them why they no longer have it. Answer: very, and because after Sprint acquired Nextel they only kept the old iDEN network around for a couple years.

        Speaking of those MVNOs that appeal to small market niches, see argument above. Granted, Nextel wasn't an MVNO, but the sentiment is the same - they had a unique offering and it got sucked up by one of the big boys because in the long run, less competition = more profits. Sprint was never the most popular carrier with the construction industry. Most of them couldn't even tell you why (hint: different cellular frequencies pass through different objects better than others, and Sprint's has an issue with concrete.)

        On the other hand, what does the construction industry have a LOT of? Answer: corporate accounts on autopay.

        So there ya go. THAT is what anyone whose carrier gets acquired by Sprint (or AT&T or Verizon or hell, even T-Mobile) has to look forward to right now.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 22 May 2017 @ 9:10am

          Re: Re:

          Given that T-Mobile is GSM and Sprint is, AFAIK, CDMA, any merger between the two offers zero technological advantage to either company.

          CDMA will get phased out in this scenario. And I think as 5G starts to take root, it will only accelerate it's EOL. Its the spectrum that matters. T-Mobile and Sprint actually own large chunks of very different frequencies, which will improve overall coverage via a combined company.

          Also, I HATED those walkie-talkies. That chirp it made should be grounds to be allowed to punch the user.

          reply to this | link to this | view in chronology ]

          • identicon
            Chuck, 22 May 2017 @ 12:00pm

            Re: Re: Re:

            Oh, I agree, they're annoying as hell, but again, ask any construction foreman in the country and they'll still tell you they miss them.

            That said, spectrum is irrelevant. Or rather, from a consumer standpoint, it's irrelevant. GSM, CDMA, GPRS, EDGE, and every other variation thereof all operate on pre-existing and very narrow frequencies. Having more spectrum doesn't do anything for the consumer because the actual radios in their phones are only looking for, for example, EDGE, on a specific frequency.

            In other words, simply having a wider array of frequencies does not automatically create any benefit for the consumer. Unless all the billions of cell phones have hidden radios we aren't aware of, that spectrum is useless to the masses.

            However, from Sprint's point of view, it does allow them to stifle competition. It allows them to prevent competitors in certain regions by saying "sure, we aren't even using CDMA any more, but you can't put up a CDMA tower within X miles of our GSM tower because even though it causes no actual interference, we own that frequency in that geographical area."

            This was always the problem with the spectrum debate. The only reason for an established telco to even WANT more spectrum than they already have is to prevent someone else from getting it. It's buying all the houses around your house and demolishing them just because you don't want them to block your view, which is fine and legal and such, except that in this case, you're promising the public that this somehow benefits them, when it obviously doesn't.

            I'm also not sure about the CDMA phase out. You're probably right - eventually everything will likely be GSM - but keep in mind, iDEN was just GSM with some fancy bits bolted on. Rather than keeping iDEN and transitioning off of CDMA then, then were more than happy to phase iDEN out instead.

            (Note, I'm not a wireless engineer or anything, I just enjoy fixing my friends' phones. I may be wrong about the specifics on iDEN.)

            reply to this | link to this | view in chronology ]

          • icon
            orbitalinsertion (profile), 22 May 2017 @ 6:56pm

            Re: Re: Re:

            5G will have zero impact on anything but high-bandwidth applications at very short ranges (lots and lots of antennae)and all of them still rely on the base network architecture. Like previous Gs it is tacked on to the contemporary system. Or, you know, charging you more for 5G bandwidth that you don't actually need to access the content you are currently using is also pretty awesome.

            Sorry you hated PTT. Nextel pretty much invented the mobile market in the States.

            reply to this | link to this | view in chronology ]

      • identicon
        techdirtReader, 22 May 2017 @ 1:07pm

        Re:

        Regarding the comment "I'd argue that their MVNOs (and MVNOs in general) are more of a competitor then Sprint is"

        In my search for cellular carrier, I noticed that Sprint MVNO's offered the best deals. That is likely not a coincidence. Sprint struggle's are forcing them to offer more generous MVNO terms than other carriers.

        Wouldn't a merger with T-Mobile risk killing the goose that is offering the golden MVNO eggs?

        reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 22 May 2017 @ 8:18am

      Utopia vs Dystopia, a matter of perspective

      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).

      Depending on what you mean by 'telecom utopia' this could be correct.

      If your definition is something along the lines of 'better for the customer', then no, the term 'telecom disaster' would probably be more accurate as they use the lack of competition and/or oversight to jack up prices while offering as lousy a service as they think they can get away with.

      On the other hand if you look at it as 'better for the companies', then 'telecom utopia' would be quite accurate for the very reasons listed above. Little to no competition, no-one interesting and able to keep you in check? That's got 'profits' written all over it.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 May 2017 @ 8:32am

        Re: Utopia vs Dystopia, a matter of perspective

        thank you for that!

        A lot of people here are thoroughly confused by the buzz word bingo games that most reporters play when they present their "news". It's pretty much making the conversation impossible to have.

        reply to this | link to this | view in chronology ]

    • identicon
      ibromoishe, 22 May 2017 @ 8:59am

      Can you please hire some poor third world person to start making infographics out of this shit so it is more shareable as propagandhi?

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 May 2017 @ 9:28am

      I lost my phone a few months ago*. It was on a Verizon plan. When I went in to replace it I got hit with a $35 upgrade fee, plus the phone's payoff. I needed a phone, so I bought a replacement from them but it pissed me off.

      So, I went to the Apple store, bought a refurb 6S Plus, unlocked and returned the Verizon 6S. The price for the refurb was less than the new 6S, so a small win.

      I then signed up for T-Moblie at $40/mo. but T-Mobile's coverage is pretty awful in these parts. Still mad at Verizon, I contacted the other devil, put myself on GoPhone, which is cheaper than what I was paying Verizon, with a 15% discount and more data that T-Mo. Another win. Amazingly, the coverage has been better than either of the other two, so I'm ahead except for the $800 payoff and phone replacement.

      ATT is still the devil though. My mother passed away and I switched the phone service from her name to mine. They popped a $10 upgrade fee on the transaction and left the WirePro on the line, despite very clear instructions to take it off. They claim to have removed both, fuggers.

      * Just because. I left the phone on a bench at a beach. When I realized it was gone, I got on findmyiphone, and tracked it down with a hotspot and my macbook. It had traveled across the freeway but if you've ever used this service you know it's accurate to within a couple of feet. I go to where it was, and two, pretty big guys (I'm big and they were bigger), got really defensive about there not being a phone literally where they were sitting. A confrontation seemed like a bad idea so I explained that it was going to be bricked. It dropped off the grid a couple of minutes later so I assume they pulled the sim, or tossed it in the pacific ocean.

      I hope the paperweight serves them well. Sadly, I'd have paid them for it and we'd all have come out ahead.

      reply to this | link to this | view in chronology ]

    • icon
      That Anonymous Coward (profile), 22 May 2017 @ 2:57pm

      Someday one has to hope that shareholders are going to realize that any income they are seeing on the stock are less than what they are paying in higher service fees.

      Perhaps the best way to save money would be to get rid of the CEOs with bloated salaries for being the worst of the worst in nickel and dimeing consumers to add 2 cents to share value.

      reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 22 May 2017 @ 7:21pm

      Before I feel too badly for these industry giants, I will vaguely recall how they make excessive profits with little work, get money for nothing from governments, don't keep their promises, and have awful service.

      There is a long way to go before i ever feel badly for them. I will certainly be long dead before that could potentially happen.

      reply to this | link to this | view in chronology ]

    • icon
      Ken Kraetzer (profile), 30 May 2017 @ 11:10am

      Helps Using Facebook Live

      I do media coverage of the military, veterans, and college sports. Walked into a Verizon store by chance last Sunday and was told I could switch to an "Unlimited Data Plan" and it would be $40 a month less than what I have been paying. Said Yes very quickly.

      Using Facebook live without wifi uses up huge amounts of plan data, this can happen at out doors events. With unlimited data I did Facebook Live broadcasts at the West Point graduation, the football team commissioning ceremony, and on Memorial Day our parade in White Plains and the 30 minute ceremony at a cemetery.

      Unlimited data plans will dramatically increase use of streaming services like Facebook Live.

      reply to this | link to this | view in chronology ]


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