Ahead of Sprint’s earnings report and customer count update for the second quarter this Tuesday, which follows earnings reports from the other top Operators in the country - Verizon, AT&T, T-Mobile, market research firm Technology Business Research (TBR) recently released the 1Q17 U.S. & Canada Mobile Operator Benchmark.
According to the report, the wireless revenue decreased 0.7% year-to-year to $55.8 billion among U.S. carriers. The decline followed lower average revenue per use (ARPU) stemming from discounts given to customers on non subsidized pricing plans as well as carrier reliance on aggressive pricing promotions to attract customers within the saturating smartphone market.
Revenue growth is also being limited by lengthening device upgrade cycles as consumers are generally holding onto their devices longer due to the higher costs of nonsubsidized devices and new smartphone models becoming less appealing as technology matures.
“Unlimited data plans are losing their appeal as a differentiator to attract subscribers in light of all four Tier 1 U.S. carriers now offering the programs. Though AT&T and Verizon improved postpaid net additions following the launch of their new programs in February, the carriers will continue to trail T-Mobile and Sprint in postpaid phone subscriber growth due to their more competitive pricing,” said TBR Analyst Steve Vachon.
“Meanwhile Sprint’s and T-Mobile’s ARPU will be diminished by their aggressive unlimited data pricing promotions to attract subscribers, such as offering free lines of service on multiline accounts.”
Combined wireless capex among Tier 1 U.S. operators decreased 1.3% year-to-year to $7 billion in 1Q17 attributed to lower spending on LTE deployments and Sprint cutting capex by 24.6% year-to-year due to delayed small-cell deployments.
With the bulk of initial LTE construction completed, carriers are now focused on adding capacity to their LTE networks, via small cells and deploying services on additionalspectrum, to support rising data traffic. Operators are also differentiating their networks by deploying LTE-A capabilities such as carrier aggregation to provide faster speeds.
AT&T and Verizon are aggressively acquiring high-band spectrum as the companies race to offer aprestandards fixed-wireless service in 2018. This trend is exemplified by Verizon nearly doubling AT&T’s initial bid to acquire Straight Path Communications.
Meanwhile T-Mobile is downplaying its rivals’upcoming fixed-wireless services and is seeking to become the first U.S. carrier to offer a nationwide mobile 5G network, with deployments beginning in 2019, and is touting the enhanced use cases thetechnology will be able to support including virtual reality, artificial intelligence and 3D printing.