Top 7 wireless carriers lose 52,000 contract customers in Q1

Top 7 wireless carriers lose 52,000 contract customers in Q1
This might be foreshadowing bad times ahead for an industry that has grown through the worse economic conditions in eons. Or it could simply signify a change in consumers' habits due to the lousy economy. According to the AP, the top 7 wireless carriers in the U.S. lost 52,000 contract customers in the first quarter. That may not sound like a lot, but consider that when the top carriers add up their gains and losses, the figures usually show cumulative growth in the number of customers on a 2-year contract. Brokerage firm Jefferies noted in a report that the industry tends to see a slow down following the pop that occurs after the introduction of the latest Apple iPhone (see chart below)

This year's first quarter saw gains in contract customers at Verizon and AT&T more than off-set by losses at T-Mobile and Sprint. The former dropped half-a-million contract customers alone in Q1 while the latter lost 192,000 such accounts in the same period. The surprise here might be Sprint which made a big bet on the Apple iPhone 4S, and also offered its version of the Samsung Galaxy S II. The carrier's variant of the Galaxy S II could be considered the best among the three versions offered in the States as it has a larger display than the AT&T version, and features a dual-core exynos processor compared to the dual-core Qualcomm Snapdragon processor inside the T-Mobile model. In addition, Sprint continues to promote its unlimited data plans.

While the contract side of the wireless business declined, pre-paid business was booming. The top 7 carriers on that side of the industry (which includes the big four plus MetroPCS, Cricket and Tracfone) saw gains of 2 million customers in the quarter. No wonder T-Mobile's former CMO called for an end to carrier subsidies on new phone purchases.

source: AllThingsD



1. remixfa

Posts: 14605; Member since: Dec 19, 2008

another interesting fact from that graph.. each iphone has netted the carriers less and less new contracts. AKA, its losing its draw for new customers, even before they started selling it on every street corner. BTW, Alan... 2 prepaid customers as a net gain? :)

2. ardent1

Posts: 2000; Member since: Apr 16, 2011

"each iphone has netted the carriers less and less contracts" makes sense since it captures the marginal iphone customers. The other way to intrepret the graph is that the iphone is continuing to displace android devices. The growth function of the iphone continues to be positive it is increasing at a decreasing rate, i.e. while the first derivative of the growth function continues to be positive, the second derivate is approaching zero.

3. remixfa

Posts: 14605; Member since: Dec 19, 2008

if it was displacing android devices and showing positive growth, then why is it stagnant to losing marketshare most quarters that are not "launch" quarters? The iphone is selling a lot of upgrades to existing customers, but it is not the draw bringing new customers anymore. Most iphone sales are generally by far to previous iphone owners.

8. ardent1

Posts: 2000; Member since: Apr 16, 2011

remixfa, if you don't understand calculus, then I can't help you. All I can say is the data points are all positive and that the 11/2011 data declined in Verizon and ATT were due to Sprint launching the iPhone, respectively. Since Sprint never has the iPhone before, therefore, sales can't come from previous iphone users.

9. remixfa

Posts: 14605; Member since: Dec 19, 2008

ardent you math is rediculous and unfounded. so ATT and VZW both sold like 5 million less iphones combined.. because sprint sold 1 million more? hmm.. your right.. if thats the correct answer, i dont understand calculus. or you dont.

10. ardent1

Posts: 2000; Member since: Apr 16, 2011

remix, I liked you better when you were making racist remarks about mainland Chinese workers. Now, you are just picking a fight showing how little you understand math and you can't read a basic chart. In the 10/2011 launch (this is calendar Q4:11), Sprint sold 1.8 million iphones and that data lines up with the chart -- if you eyeball the chart, the combine net adds or marginal customers were under 2 million for VZW and ATT combined. You clearly pulled the 5 million number out of your butt like usual. As I originally commented and YOU STILL DON'T GET IT, I am dealing with the MARGINAL customers. VZW and ATT are still showing positive marginal gains despite the marginal 1.8 million going to Sprint in the 4S launch period.

6. greathero1

Posts: 584; Member since: Jun 13, 2008

Well, looking at the overall picture and the overall net additions, Android phones are more than likely in the same boat. Their probably is not going to be the astronomical growth that the wireless industry has had in previous years because most people already have cell phones now. Its just a matter of retention. I remember about 2 or 3 years ago, Verizon was adding over 1.5 million subscribers per quarter. Nobody is doing that here in the states anymore with the exception of the 4th quarter (holiday sales).

7. remixfa

Posts: 14605; Member since: Dec 19, 2008

we just passed the 50% barrier as far as smart phone adoption. As far as total phone adoption, we are pretty well saturated... that part is very true. Its just a hunch but a lot of people might be holding off getting their kids and extra loved ones on family plans due to the rough economic times, where before adding family was where a lot of those lines came from. That also might help explain why so many people are moving to prepaid.

4. crysiswarmonger

Posts: 82; Member since: Feb 06, 2012

I am tired of being locked in for 2 years. I just bought used phones (two very recent releases for not much more than Verizon charges for them with a 2 year contract) to move from Sprint to Verizon, I did not want to be locked in to a phone / carrier for 2 years.

5. jlscott777

Posts: 45; Member since: Feb 10, 2012

I think a lot of people like I did are now really looking closely at their wireless needs and deciding that prepay suits there needs much better then being stuck in a 2 year contract, much less costly in the long run to buy an unlocked phone and go pay as you go if you really do not need a lot of minutes or big data plan.

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