Wireless Capital expenditure (Capex) of Tier 1 U.S. operators dropped 10.6 percent in Q3 2016 to $7.6 billion.
The dip in Capex related investment was primarily due to carriers completing the bulk of initial LTE network construction and Sprint’s significant pullback in telecom equipment spending during the third quarter of 2016.
U.S. telecom operators are focusing short-term Capex on densifying LTE networks by acquiring additional spectrum and deploying small cells to support rising network traffic.
Telecom operators in the U.S. will be focusing on making investments on 5G in the long term as the technology becomes standardized around 2020.
Verizon and AT&T plan to launch pre-standards 5G fixed-wireless services in 2017 that will augment their existing wireline broadband services.
Operators are capitalizing on the demand for mobile video to boost subscriber additions. The T-Mobile One and Sprint Unlimited Freedom unlimited data plans launched in August and are alleviating subscriber concerns over incurring overage fees from mobile video viewing.
Verizon is refraining from offering unlimited LTE data to maintain high profitability, but is providing zero-rated streaming to some mobile video services, such as its go90 platform, to attract customers.
AT&T began offering its customers zero-rated access to DirecTV mobile streaming services in September.
Wireless revenue of top telecom operators increased 1.1 percent — primarily due to the result of T-Mobile’s 17.8 percent revenue.
“While T-Mobile and Sprint remain able to increase wireless revenue by generating higher postpaid phone additions through competitive pricing, Verizon and AT&T are relying on value-added services to offset declining revenue from slowing phone subscriber growth,” said TBR Senior Analyst Chris Antlitz.
Rather than undercutting competitors to boost subscriber additions, Verizon and AT&T are focused on improving profitability by retaining premium subscribers and leveraging the companies’ LTE networks to support their burgeoning Internet of Things (IoT), mobile video and media businesses.
Wireless revenue among Tier 1 Canadian carriers rose 3.4 percent. In contrast to operators in the U.S. wireless market, all Tier 1 Canadian operators increased service revenue due to subscriber additions stemming from the launch of the iPhone 7, competitive pricing promotions and the freedom for more customers to switch carriers due to Canada’s shift from three year to two-year contracts.
All Tier 1 Canadian carriers improved wireless churn in 3Q16 because of successful customer service initiatives and improved network quality.
editor@telecomlead.com
