Despite Starting a Price War, T-Mobile USA Will See its Market Share Drop
Published on: 20th Feb 2014
Note -- this news article is more than a year old.
The top US wireless carriers are locked in a battle for LTE dominance, with a new price war breaking out for 2014. Despite instigating the war, T Mobile USA will not win, says Strategy Analytics.
The research firm notes that while the latest pricing moves are spurred on by competition, they are also responding to customer demand and leverage network advancements -- without which such shifts in pricing would not make economic sense.
Looking ahead, among the top four carriers, Verizon Wireless is still expected to remain on top and T-Mobile on the bottom, while only Sprint gains more than a percentage point in share. T-Mobile will take nearly 16% of retail gross adds in 2014 -- on par with Sprint and not too far off market leader Verizon Wireless at 22% -- its high churn levels will mean it underperforms on share of net adds at only 9% compared to Verizon's 47%. T-Mobile will struggle to stay near 11 percent of the retail market, while Sprint will gain a percent to reach 15.5% by 2018 and the two leaders remain on top with Verizon Wireless at 33% and AT&T Mobility just under 25%.
As the big carriers follow T-Mobile's lead and offer installment payment plans for smartphones instead of large upfront subsidies, the average subsidy per handset connection will drop from $125 in 2013 to $106 in 2018 -- but the subsidy model is not expected to fully disappear in the USA.
Susan Welsh de Grimaldo, Director, Wireless Operators & Networks said: "Despite the price war, we do not anticipate any major shifts in market positioning among the top 4 carriers in 2014, as Verizon Wireless and AT&T have shown they can leverage expanding LTE capacity and fight back with compelling offers that tap into consumer demand at the upper and middle tiers of the market. Newly freed capacity on their 3G networks will give more room to be price competitive with entry level and prepaid plans this year as well."