American telecom service provider T-Mobile will not win the LTE battle with AT&T, Sprint and Verizon, according to Strategy Analytics.
This is despite T-Mobile kicking off the tariff war for LTE dominance in the U.S.
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Strategy Analytics today said 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.
Strategy Analytics forecasts the U.S. telecom market will see nearly 200 million new LTE retail subs from the end of 2013 through 2018.
The report — US Wireless Market Outlook 2013-2018 by Strategy Analytics — says overall subscriber net additions will grow from 7.5 million in 2014 to 15 million in 2018 (across smartphones and other handsets, PCs, modems and tablets and other consumer electronics).
Among the top four carriers, Verizon Wireless stays on top and T-Mobile on the bottom, while only Sprint gains more than a percentage point in share.
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T-Mobile will take nearly 16 percent of retail gross adds in 2014—on par with Sprint and not too far off market leader Verizon Wireless at 22 percent—its high churn levels will mean it underperforms on share of net adds at only 9 percent compared to Verizon’s 47 percent.
T-Mobile will struggle to stay near 11 percent of the retail market, while Sprint will gain a percent to reach 15.5 percent by 2018 and the two leaders remain on top with Verizon Wireless at 33 percent and AT&T Mobility just under 25 percent.
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 will not disappear in the US.
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In 2014, prepaid will represent over half the gross adds, but represent only 25 percent of total retail subscriptions and an even lower 14 percent of wireless carrier service revenue.
“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,” said Susan Welsh de Grimaldo, director, Wireless Operators & Networks.
The report notes that 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.
Sprint is suffering as it works through network upgrades and plays catch up with LTE build, but should be in good position to lower churn and regain some share losses by Q4.
“T-Mobile will benefit as it adds more carriers (spectrum) into its LTE network this year and then into 2015 as it moves to add 700 MHz spectrum for better in-building and rural coverage,” said Phil Kendall, director, Wireless Operator Strategies.
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