We are one week from the end of the second quarter. Often, the official start to summer ushers in a slowdown with the major US carriers selling fewer smartphones, wearables, and other connected devices. This year, the third month of the quarter is HOT. Promotions and 5G smartphone prices are falling quickly. Stores are now 100% open and the major carriers have upped the promos and are all looking to win over churning subscribers. Here are some of items we are following:
The biggest news—the unloading of media and divesting of WarnerMedia (and previously DirecTV). These were both expensive errors expected to accelerate mobile services growth. DirecTV, for example, did not help growth and it really only kept churn on par with its competitors. A carrier cannot spend on media to compete with Netflix and Disney and also roll out a 5G network (2 in AT&T’s case including FirstNet first responder network!). Media bundles which T-Mobile has deployed for years (free Netflix) and Verizon (free Disney+) are less costly and equally effective.
Less debt and weight of media investments will help AT&T invest in broadband rollouts – both fiber and fixed wireless access. AT&T will also be able to invest in new MEC and new private 5G network services. The prepaid market is also starting to heat up as US unemployment slowly falls. AT&T must make appropriate investments in its 13 million subscriber base at Cricket. It will be adding at least 250 stores with some interesting targets. 5G sales will accelerate as new, cheaper 5G devices rollout in the second half of the year.
AT&T will continue to expand its FirstNet first responder network, which has over 2.2 million connections and over 16,000 public safety agencies and organizations using the network. Lots of opportunity to grow helping first responders protect during natural disasters, protecting cities, and protecting large venues such as stadiums.
Finally, some debt reduction helps the carrier bring aggressive moves into mobile, such as its 36-month equipment installment plan, its aggressive move to upgrade the base with the same offers as new customers, and other marketing offers waiting to be deployed. AT&T has seen an increase in subscriber growth and these moves will solidify low churn medium-term.
For complete AT&T analysis and insights see, AT&T Changes Gameplan: Divesting Media and Doubling Down on Broadband and 5G.
Launched aggressive marketing moves as it has matched AT&T and T-Mobile giving the existing base great offers to upgrade. Verizon offers existing customers $700 per smartphone to upgrade. Broken device? Verizon will credit you $400. Verizon was not as aggressive as AT&T in the first quarter, but it clearly has gotten more aggressive for new customers in June.
New agreements with Crown Castle and SBA signal that mid-band rollout will be aggressive. Devices supporting C-Band are already being sold, so when the network is lit up at the end of 2021 there will be millions of devices supporting the network upgrade. mmWave is available in parts of over 70 cities. Verizon is aggressively upgrading the base to 5G with special offers with hopes of seeing more than 50% of the base on 5G devices by the end of 2023.
Verizon continues to be the network partner of Xfinity Mobile and Spectrum Mobile, the MVNO’s winning well over 20% of the industry’s net additions.
Verizon 5G Home, its fixed wireless access (FWA) service, has hopes of large increases in 2022. Most of Verizon’s mmWave deployments are in non-residential areas where there is limited FWA opportunity. The opportunity really comes as C-Band is deployed and that is mainly a 2022 event. When C-Band is ready, FWA will become very interesting. To its credit, Verizon has led by example in safely continuing business during the pandemic. No layoffs and plenty of time-off to keep ‘health a #1 priority’.
From complete Verizon insights, see Verizon Betting on High-value and Business Subscribers Until C-Band is Ready.
T-Mobile has been dominating net additions for many quarters, which we have written extensively on. We expect T-Mobile to again win the net addition war in Q2. T-Mobile continues to market its 5G lead with the most consumers covered by 5G via its 600MHz and 2.5GHz assets.
T-Mobile continues to absorb Sprint while attempting to keep churn low—something the carrier has been able to do to date. The main focus for T-Mobile is gaining where it is under indexed—B2B.
Fixed wireless access (FWA) service is another major new opportunity that is prime for T-Mobile now that its 5G network has tremendous reach and scale. The carrier is attacking FWA differently than Verizon and AT&T. Verizon and AT&T are focusing on urban areas, offering FWA with their mmWave spectrum assets (and C-Band in 2022). T-Mobile will be able to focus on underserved rural and suburban areas with broadband options utilizing its 2.5GHz spectrum.