T-Mobile's appeal to millennials has helped it gain ground in the wireless wars TMUS, S, T, VZGet the Full StoryBI IntelligenceThis story was delivered to BI Intelligence Apps and Platforms Briefing subscribers. To learn more and subscribe, please click here.
T-Mobile reported a strong second quarter, boasting 9.2 billion in revenue and more customer additions than the rest of the Big Four carriers in the US.
Despite a slight drop in net additions from the same period last year, the company posted an impressive 1.9 million customer adds, including 890,000 net postpaid subscribers.
The other three major US carriers — Verizon, Sprint, and AT&T — had mixed results in terms of customer additions:
Verizon added 615,000 postpaid net additions this past quarter, and generated revenue of 21.7 billion, a 4 decline YoY.
Sprint showed a return to growth with 180,000 net postpaid subscriber adds. The company reported revenue of 8 billion in Q2 2016, mostly flat from Q2 2015.
AT&T lost 180,000 postpaid US subscribers during the quarter. However, this is an improvement from the 363,000 postpaid customers the company lost in the previous quarter. AT&T generated 40.5 billion in revenue for Q2 2016.
T-Mobile’s use of customer perks as a part of its "Un-carrier" campaign continues to draw in new customers and secure existing ones. Although all four operators provide a variety of free-data offers for consumers, T-Mobile’s offerings, which piggyback on popular trends, appear to resonate more strongly with consumers. For example, the T-Mobile Tuesday app offers customers perks like free Domino's pizza, or free data for a year for Pok mon Go players.
These zero-rating practices are fast becoming important strategies for service and content providers as they vie for subscriptions. A survey conducted in April of more than 2,000 adults in the US looked into consumer attitudes toward free data services and found that 33 of all adults and 45 of those aged between 18 and 34 millennials said they were very or extremely likely to try a new online service if it were part of a free data service. Furthermore, 53 of all survey respondents said they were likely to stay with their existing provider if it were to offer free data services.
The growing popularity of these free-data services will give businesses and brands a new and highly engaging ad channel. For example, businesses could offer to discount a user's monthly data bill in exchange for viewing an ad on their smartphone lock screens, or for viewing a video or trailing an app. Sprint-owned Boost Mobile has already begun offering such a service in the US via Unlockd, according to AdWeek. Unlockd gives users the option to have 5 taken off their monthly bill in exchange for engaging with brands.
AT&T and Verizon have dominated the carrier market over the past seven years while T-Mobile and Sprint have struggled to gain subscribers. Then in 2013, T-Mobile tweaked its strategy to turn around its business.
This move, along with slowing smartphone adoption and other forces in the mobile industry, killed the two-year contract and initiated an ongoing price war between carriers. The movement away from the contract model is not only changing the way carriers operate, it’s affecting the myriad of industries that rely on carriers’ services.
Will McKitterick, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on wireless carriers that examines how the wireless industry has fundamentally changed since carriers began aggressively responding to the launch of T-Mobile’s “Un-Carrier” movement. It also looks at the factors underpinning changes in the broader wireless industry and the challenges carriers face in 2016 and beyond, including the upcoming spectrum auction and the deployment of new wireless technologies.
Here are some key takeaways from the report:
Consumers are actually becoming more loyal to their current wireless operator even as competition between the carriers intensifies.
The wireless carriers are not only battling over device financing, they’re also trying to woo consumers through attractive data packages.
Intensified competition between carriers has lengthened the smartphone replacement cycle, posing a challenge for mobile software developers and handset makers.
With phone subscriber growth stagnating, carriers will look to alternative sources of revenue, including connected cars, tablets, and IoT devices, to drive growth.
The upcoming spectrum auction, the latest ruling on net neutrality, and new technology, will change the face of the broader wireless industry in next few years.
In full, the report:
Examines the impact of T-Mobile’s Un-Carrier movement on the wireless industry.
Forecasts how the death of the two-year contract will impact the broader mobile industry.
Identifies how carriers are helping facilitate the growth of mobile video consumption.
Explains the changing nature of subscriptions and the growing importance of connected devices.
Discusses what changes and challenges the wireless industry will face over the next five years.
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