Verizon adds 2M new connections, but customer turnover increases

At a high level, Verizon had a very good fourth quarter for customer growth. It brought on board an additional 2.07 million subscriptions, upgraded many old feature phone customers to new 4G smartphones and connected 1.4 million new tablets to its network. But there were also definite signs that Verizon’s formidable wireless citadel is showing weaknesses as competition from T-Mobile and a recently rejuvenated Sprint increases.

[company]Verizon[/company]’s churn rate was the highest its been in more than two years, hitting 1.39 percent. A carrier’s churn is the percentage of overall customers who leave each quarter. Carriers with a lot of prepaid and transient customers tend have a lot higher churn, but Verizon, with its huge focus on postpaid contracts and family plans, historically tends to have the lowest turnover rate in the industry.

Of particular note, Verizon’s fabled postpaid churn rate — usually below 1 percent – jumped to 1.14 percent, which represents about 1.16 million of Verizon’s most valuable contract and family plan customers abandoning ship.

Just because a churn rate is high doesn’t mean a carrier is shrinking. It just has to court new customers more aggressively. That’s exactly what Verizon did in the fourth quarter, luring customers over from other carriers and encouraging existing customers to connect more gadgets. But CFO Fran Shammo said Verizon was only prepared to be so aggressive. Many of those departing customers left because prices were cheaper at the competition, and Verizon isn’t willing to engage in price war, preferring instead to let those customers go, Shammo said at Verizon’s earnings call.

It looks like [company]T-Mobile[/company] was the primary beneficiary. It hasn’t reported earnings yet, but earlier this month it released its subscriber numbers for 2014, showing 2.1 million net new subscribers in Q4. [company]Sprint[/company] also saw 1 million new net customer additions in the last quarter. [company]AT&T[/company] hasn’t yet released its subscriber numbers for the quarter.

Verizon by no means is crumbling under the pressure of T-Mobile’s Uncarrier strategy, but an increasing churn rate is definitely something to keep an eye on. The last time Verizon’s postpaid churn rate popped up above 1 percent was in Q1 of 2014, when Verizon actually lost phone customers for the first time in recent memory.

Verizon ended 2014 with 108 million total postpaid and prepaid connections. Though Verizon reported profits for the full year of $2.42 per share, it suffered a loss in fourth quarter of $2.15 billion, or 54 cents a share.

During the company’s earnings call, Shammo was also asked about the possible threat of Google entering the carrier biz by becoming a mobile virtual network operator. The CFO didn’t seem too worried. He pointed out MVNOs have been around for 15 years with posing any huge threat to Verizon. Shammo has a point. By becoming a virtual operator, [company]Google[/company] would need the carriers to give it wholesale access to their networks. It’s difficult to challenge an industry when you’re entirely dependent on that industry to survive.

 

Yep, Google wants to be a mobile carrier — again

It’s a new year, which means we’re all ready for a new round of speculation that Google will become a mobile carrier. Right on cue, The Information’s Amir Efrati published a report saying Google will shortly begin offering its own mobile plans by becoming a mobile virtual network operator – a network-less service provider that buys capacity on another carrier’s infrastructure.

I’m not trying to bust Efrati’s chops – well, maybe a little – as he’s rarely wrong, but this is a story that’s been ‘evolving’ for the better part of the decade. Last year, The Information reported very much the same story with a few details changed. At that time Google was in discussions with [company]Verizon[/company] and [company]Sprint[/company] to use their networks. Today the discussions are with Sprint and [company]T-Mobile[/company] and the effort has a code name, “Nova.”

One other new detail of significance: Efrati reports that Google views this project as an “experiment” aimed at challenging the status quo in the U.S. mobile industry. That’s an interesting thing to note because there’s definitely precedent for Google monkeying around with the industry to get carriers to change their behavior.

In 2008, [company]Google[/company] entered the 700 MHz spectrum auction bidding right alongside Verizon for airwaves that would eventually become the foundation of Big Red’s LTE networks. Google readily admitted it didn’t want to win that spectrum and become a 4G service provider. It just wanted to force the eventual winner beyond a price threshold that would ensure those airwaves would be open to any device or application. The ploy worked.

As I’ve stated on many forums I really doubt Google has any interest in becoming a full-fledged mobile carrier. I’m not saying it’s outside the realm of possibility – Google had done far crazier things, such as Project Loon. I’ve even written posts speculating what a potential “Google Wireless” might look like. And sure, I could definitely see Google trying to temporarily shake things up in the industry, as the Information suggests, with a new approach to the technology and business model of wireless (it’s doing much the same thing with Google Fiber). But in the long-term, selling minutes and gigabytes, climbing towers and fielding phone calls from irate customers is not the kind of utility business Google wants to be in.

Who knows? After years of rumors and speculation, maybe this is what Google Wireless was always meant to be: a virtual carrier selling time on someone else’s network (perhaps with a little added help from hopped-up Wi-Fi hotspots in Google Fiber markets). It’s definitely more feasible then some of the other rumors like Google buying T-Mobile or purchasing its own spectrum.

Or this could just be another red herring. At this point I suspect the tech media wants Google to become a mobile carrier much more than Google does.

 

FreedomPop cobbles together a Wi-Fi network of 10M hotspots

FreedomPop started selling its own Wi-Fi-only phone last year, so it was only a matter of time before the mobile virtual network operator (MVNO) started selling Wi-Fi service. On Wednesday it will turn on access to a Wi-Fi network of 10 million hotspots and an unlimited voice, SMS and Wi-Fi data plan for $5 a month – quite a deal if you don’t mind cutting the tether to the cellular network completely.

The Wi-Fi network is actually owned and run by many different ISPs and hotspot aggregators, FreedomPop CEO Stephen Stokols told me in an interview, though he wouldn’t reveal the names of specific providers. He did, however, name specific examples of places FreedomPop Wi-Fi can found: [company]Starbucks[/company], [company]Burger King[/company], [company]McDonalds[/company] and [company]Panera Bread[/company] locations; [company]Walmart[/company] and [company]Home Depot[/company]; malls and outdoor hot zones in major metro markets.

So FreedomPop is obviously working with some of the biggest Wi-Fi aggregators in the country such as [company]Google[/company] and [company]AT&T[/company] as well as big ISPs like the cable operators, who run urban hotspot networks. Stokols did confirm that FreedomPop is not working with [company]Boingo[/company] so you’re probably not going to see FreedomPop’s Wi-Fi service in a lot of airports, but he said there is a deal with Devicescape in the making, which could add millions more crowdsourced hotspots from small businesses to FreedomPop’s network in the coming months.

To tie all of those different networks together, FreedomPop has developed an Android app (no word yet on iOS) that will act as a kind of skeleton key for those 10 million hotspots. The app will automatically log the device into the access point when they’re available and will establish secure links at hotspots that support encrypted connections. As more ISPs move adopt newer Hotspot 2.0 technology, FreedomPop will migrate its app to the new login technology as well, Stokols said.

FreedomPop won’t just be selling offering the service over its own tablets and phones. The company plans to use the network to expand beyond [company]Sprint[/company] devices — it currently resells Sprint’s 4G data services – to practically any device that has a Wi-Fi radio. Stokols said that there are millions of retired devices lying around people’s homes that no longer have cellular service from any of the major carriers. FreedomPop is offering to reconnect those devices through Wi-Fi. There’s also an opportunity to sell FreedomPop’s Wi-Fi access to prepaid phone users with limited data plans, Stokols said.

It’s safe to say that FreedomPop’s customers are already pretty comfortable with Wi-Fi. The virtual carrier’s baseline “freemium” service gives any customer 200 VoIP minutes, 500 text messages and 500 MB of 4G data at no charge, so customers naturally gravitate to their home, office and public Wi-Fi networks to augment their data usage. FreedomPop eventually plans to begin asking its customers to bring their own personal Wi-Fi routers into the fold, creating a crowdsourced network similar to Fon’s, Stokols said.

AT&T goes pan American, closing its $2.5B Iusacell deal

AT&T is now officially the first North American mobile carrier to run networks on both sides of Rio Grande. On Friday, Ma Bell announced it has finalized its $2.5 billion acquisition of Mexico’s Iusacell from Gurpo Salinas.

The deal doesn’t bring that many new subscribers to its network – Iusacell’s 9.2 million subscribers puts it in a distant third place to Mexican wireless giant América Móvil — but it gains access to a GSM and CDMA network covering 120 million people. AT&T is promising to create a unified network covering 400 million people in North America, though I doubt that will mean the in-network coverage on a standard AT&T plan will suddenly extend to Mexico City and Oaxaca.

Chances are AT&T will start marketing specific plans for frequent cross-border travelers in both countries as well as sell calling features that make it cheap or free to call Mexican landlines and mobile numbers from the U.S. and vice versa. América Móvil does much the same thing through its U.S. mobile virtual network operator TracFone. For instance, one of TracFone’s brands Telcel América is named after Móvil’s primary brand Telcel in Mexico, an it offers a $60 plan that includes 1,000 calling minutes to mobile numbers in Mexico and unrestricted calling to landlines in Mexico along with unlimited talk and text inside of U.S. borders.

AT&T appointed a 19-year Ma Bell vet Thaddeus Arroyo as CEO of Iusacell, and he will be assisted former CEO Adrian Stickel in the transition. I suspect they’ll have a big integration task ahead of them. It takes a lot more than just duct tape and superglue to fully combine two national networks, though the fact those networks are in completely different geographies helps. Iusacell is also in the process of transition from CDMA technology to GSM, which will make roaming between the two countries a lot easier.

AT&T has also committed to bring LTE services to Mexico, which Ma Bell helps will be key to growing Iusacell’s customer base. Mexico has a rapidly growing middle class, but its smartphone penetration is roughly half that of the U.S. LTE and smartphones go hand and hand, so 4G represents a big opportunity for the combined carrier, AT&T said in a statement.

EE’s LTE connections nearly quadrupled in 2014

It looks as if 2014 was the year that 4G found its stride in the U.K. Everything Everywhere, the first carrier to offer LTE in the U.K., grew its 4G customer base from 2 million connections last January to 7.7 million at the end of 2014. EE now claims to have more 4G customers than any operator in Europe.

[company]EE[/company]’s network now covers 510 cities and towns with a population of 10,000 or more and reaches eight of every 10 people in the country. By the end of 2015, EE expects its 4G signals to cover 98 percent of the U.K.’s population. [company]O2[/company], [company]Vodafone[/company] and [company]Three[/company] have also launched 4G services in the U.K., though EE remains the market leader with double the subscribers of its nearest competitor O2.

The carrier, which combines the U.K. mobile businesses of [company]Deutsche Telekom[/company] and [company]Orange[/company], has been expanding the capacity of its network as well as its reach. Last fall, it launch an upgraded service in London supporting theoretical speeds of 300 Mbps, and using the latest LTE-Advanced techniques it has begun trials of a network capable of surpassing the 400 Mbps barrier.

Sprint will finance Spark rollout through its network suppliers

Sprint appears ready to invest in its long-delayed Spark network rollout, but it’s getting some help from the companies that will be providing the equipment. Nokia, Samsung and Alcatel-Lucent are supplying a combined $1.8 billion in LTE gear and engineering services on credit. Sprint is getting a $300 million loan form Export Development Canada. Though Sprint didn’t announce any new timeline for the snail-pace rollout of its Spark uber-4G network, hopefully this will light the necessary fires to bring Sprint’s LTE service on par with its competitors’ sooner rather than later.

AT&T strikes back at T-Mobile with its own data rollover plan

T-Mobile’s Data Stash, which lets you carry over unused megabytes from one month to the next, has only been lived seven days, but AT&T has already come up with a counter plan. It announced its own data rollover program on Wednesday that will allow customers on its shared plans to save their leftover data at the end of each billing cycle.

Rollover Data launches on January 25, and it will automatically apply to all customers on AT&T’s Mobile Share Value plans. But as always with programs like these, there is a big caveat. [company]AT&T[/company] won’t let you keep banking the same data month after month. You have to use it up in the next billing cycle or lose it. Here’s how AT&T explains it:

If you have four lines and have a 15GB AT&T Mobile Share Value Plan and only use 10GB in a given month, you’ll roll over 5GB and have a total of 20GB available to use within the next month.  If you were to only use 10GB in the second month, you’ll again roll over 5GB and have a total of 20GB available the next month. Bottom line: if you have unused plan data this month, it automatically rolls over to be used within the next month in case you need more than your plan’s allotment. This gives you that extra data to do the things you love across all your devices, like surfing the web, watching videos, listening to your favorite music or sending email.

[company]T-Mobile[/company]’s Data Stash lets you keep banking data for a full year after you accrue it (think of your saved megabytes as frequent flier miles that expire after a year). But T-Mobile’s program has its own caveats, the biggest one being that it’s only available to individual line subscribers with a postpaid data plan of 3GB or more. Also, for some strange reason, you can’t actually start rolling data over on Data Stash until you use up an initial 10GB of free data with which T-Mobile is seeding all of its eligible customers’ accounts.

Each program has its pros and cons. AT&T’s Data Rollover is available at any level of shared plan so you can carry over data even on the lowliest 300 MB plan. That data can be used by any device attached to that plan. Data Stash, on the other hand, is restricted to heavier-use individual plans. But because of AT&T’s Data Rollover’s mechanics, you can’t cram big piles of gigabytes under the mattress. Meanwhile, T-Mobile’s plans let you truly bank big chunks of data for a rainy day.

What’s most interesting, though, is how quickly AT&T responded to T-Mobile’s new Uncarrier policy. T-Mobile isn’t even getting a month to test the waters before AT&T’s rival rollover plan goes into effect. AT&T was fast to follow T-Mobile’s phone upgrade program Jump as well, announcing its Next upgrade plans just a week later.

It’s clear that AT&T views T-Mobile’s Uncarrier strategy as a big threat if left unchecked, but AT&T also seems ready to swing at everything T-Mobile throws at it.

T-Mobile grew by 8.3M subscribers in 2014

T-Mobile’s customer growth spurt continued into the normally busy holiday season in 2014 as it added 2.1 million new connections to its ranks. It wasn’t T-Mobile’s best quarter of the year for subscriber growth – that would be its blockbuster Q1 – but it was a good way to cap off a very successful year.

Off the back of its evolving Uncarrier strategy, T-Mobile recruited 8.3 million net new subscribers to its ranks, the carrier revealed Wednesday ahead of its official earnings next announcement next month. In a single year T-Mobile grew its customer base by 18 percent, giving it a connection total of 55 million. At the end of Q3, Sprint had 55 million subscribers as well, so if Sprint continued its customer loss streak in Q4, T-Mobile will have assumed the mantle of the country’s third largest carrier.

[dataset id=”904858″]

T-Mobile’s gains weren’t all due to Uncarrier, though. It added 1.3 million net new postpaid customers and 266,000 net new prepaid subscribers in the quarter, but the remaining 586,000 links were comprised of wholesale connections from mobile virtual network operators (MVNOs) like Ultra Mobile, Straight Talk and Target’s Brightspot, as well as from machine to machine connections linking the internet of things. Sprint used to be king of MVNOs, but T-Mobile has become much more aggressive in attracting virtual operator customers as of late.

SK Telecom glues together 3 LTE networks, hitting 300 Mbps speeds

SK Telecom is starting the new year with a new kind of 4G network – or at least a network built from the pieces of its older LTE systems. This week, SK turned on a 300 Mbps LTE service that ties together spectrum from three different frequency bands.

The network uses an LTE-Advanced technique called carrier aggregation to bond together 4G channels to create a kind of super-connection. [company]SK Telecom[/company] was one of the first operators to use carrier aggregation technology, bonding two 4G transmissions together back in 2013 to hit 150 Mbps. At the time, it jumped the gun a bit by calling its network LTE-Advanced, when in truth it wasn’t building anything more powerful than most LTE services in Europe.

But by using tri-band carrier aggregation, SKT is now making the leap to speeds that plain old LTE could never reach. It’s combining 20 MHz in the 1800 MHz band with 10 MHz in each of the 2.1 GHz and 800 MHz bands, and coordinating their transmissions so they act like a unified downlink pipe.

As SKT gets access to more spectrum in those bands it can boost speeds and capacities further. The U.K.’s [company]Everything Everywhere[/company] is already testing a network in London with [company]Huawei[/company] and [company]Qualcomm[/company] that hits 410 Mbps, while SK itself has used tri-band tech to hit 450 Mbps in demos. SK said it is already working on combining four and even five frequency bands.

Though SKT claims the new network is now commercial launched, it doesn’t appear to be widely available just yet. The operator said it plans to upgrade 26,000 cell sites in the Seoul metro area and the centers of other South Korean cities in the first quarter. It also plans to offer the new tri-band capabilities in all of the country’s subway lines.

As for devices, per usual the SKT is ahead of the curve. [company]Samsung[/company] has made a version of Galaxy Note 4 that appears to be specifically optimized for the Korean network, and SK said it would offer those oversized handsets to a limited group on customers to help it test and improve the service. The first widely available devices with tri-band aggregation support should be coming out in the next six months, according to Qualcomm.

Get ready to bank your MBs: T-Mobile’s Data Stash goes live Jan 1

Starting tomorrow, many T-Mobile customers will start seeing a new item show up on their bills: a bank of unused megabytes or gigabytes that customers can save up for a data-intensive day.

[company]T-Mobile[/company]’s Data Stash rollover program goes into effect on New Year’s Day, and customers should start seeing their respective stashes appear in their online accounts within 24 hours of their first billing cycle in January, T-Mobile confirmed. T-Mobile is seeding all of these accounts with 10 GBs of free data, and after that data is used up any unused megabytes or gigabytes from your monthly plan will start accruing in the stash (For some inexplicable reason, T-Mobile won’t rollover any new data until that 10 GB is entirely consumed).

Announced earlier this month as part of T-Mobile’s “Uncarrier” strategy to shake up the U.S. wireless industry, Data Stash represents the first time a major U.S. carrier has let customers keep their unused portion of their monthly data buckets at the end of the billing cycle. Traditionally carriers have taken a better-safe-than-sorry approach to marketing data plans, often selling consumers more data than they need so they can avoid paying overage fees on any given month.

The Paramount Theater in Seattle played host to T-Mobile's Uncarrier 5.0 event in June.

Data Stash is definitely a move toward more consumer-friendly data pricing models, though in my opinion T-Mo could have gone further. If T-Mobile really wanted to truly level the terrain for the consumers it should have started selling data by the gigabyte. Once you use up your first gigabyte, you purchase another and so forth – similar to the way we buy gasoline. Some small virtual carriers like Karma are exploring those kinds of metered data models, but it’s safe to say not even the progressive of the major carriers is willing to take that step yet.

But give credit to T-Mobile: Data Stash will is a big step in the right direction, and it’s available at no extra charge. So do you stand to benefit from having a data stash? It depends on how you use data, and in general heavier smartphone data users will benefit from Stash a lot more than lighter users. Almost everyone with a T-Mobile tablet plan, however, will find Data Stash useful.

Who gets a stash and who doesn’t

First off, it’s important to note that the program is only available to T-Mobile’s postpaid customers on a 3 GB or 5 GB Simple Choice individual plans, so you have to buy a lot of monthly data in order to save it. Stash does little good for you if you’re on an unlimited plan, it goes without saying. And if you’re on T-Mo’s 1 GB or 500 MB plan or are a prepaid customer, your unused 4G data will expire at the end of your billing cycle just as it always has.

According to T-Mobile SVP of Marketing Andrew Sherrard, though, about 80 percent of T-Mobile’s postpaid customers are on 3 GB or greater data plan, so a good part of T-Mo’s customer base will benefit.

piggy bank

There’s also another way of looking at the figure, however: it could be a good deal of T-Mobile’s customers are over-subscribing to data each month because the next rung below the 3 GB tier is a 1 GB plan. Meanwhile the average smartphone data consumption in the U.S. is about 2.2 GBs per month, according to Chetan Sharma Consulting. T-Mobile has been doing the same thing it accuses its competitors of doing: selling customers more data than they need each month.

The big advantage of having a rollover plan is that lets you prepare for the typical month of data usage instead of always preparing for the worst-case scenario. Take my own data consumption: I lean heavily on Wi-Fi (and, sadly, rarely leave the home/office) so my data use is well under 2 GBs each month. But when I travel for work or pleasure my data usage spikes as my Wi-Fi connection gives way to cellular and I rely on my smartphone’s connection more for work and entertainment. I need a 2 GB plan or greater plan for those few months I’m spending more than a few days away from my neighborhood, and more often than not 2 GBs isn’t enough.

“Averages are really dangerous,” Sherrard pointed out. Your monthly average means nothing that one week you’re spending at a work retreat or that summer every four years when the World Cup is on and you’re streaming games every lunch break, Sherrard said. Data Stash is perfect for those types of situations, Sherrard said.

If you’re looking forward to Data Stash as a means of saving you money, you’ll probably be disappointed. While there are some people who may be able to downgrade from 5 GB to a 3 GB plan by banking gigabytes, it’s not possible to use Data Stash to downgrade to a 1 GB plan. Most people will find themselves subscribing to the same data buckets they always have. And if you have a 1 GB plan today, you would actually have to pay more money to take advantage of the program.

The advantage, however, will come when those worst-case scenarios present themselves: When Italy is paying France in the semifinal and you have to sneak out of the office to watch it in the bushes or when you’re enduring a long layover at the airport and decide to stream Lord of the Rings. These aren’t scenarios a 3 GB or even a 5 GB plan could normally handle without the help of a few stored up gigabytes in the bank.

The one big caveat is you have to use up your stored data within a year of accruing it. So any unused data banked next month will need to be consumed by January of 2016 and so forth. 

Now let’s talk tablets

For tablets, Data Stash kicks in at the 1 GB tier, which means anyone with a paid data plan (T-Mobile’s free 200 MB bare bones plan doesn’t count) can use it. That’s a pretty important point because most people aren’t using mobile data on tablets the way they use it on smartphones, at least not yet.

tablet usage generic

Because tablets consume much more bandwidth than the typical smartphone and the costs of data are still high, we tend to restrict our slates to pools of Wi-Fi and use 4G cellular as a backup. I don’t think Data Stash will change that basic pattern, but it is far better suited to deal with the tablet’s extremes. For instance, you could go two months without connecting your tablet to the cellular network and then one day consume 3 GBs in a single sitting. Even if you’re on the most basic 1 GB plan, you’re still prepared for that scenario.

In short, Data Stash could go further. This program isn’t going to revolutionize the way you buy data or slash your monthly phone bill by $20. But it will come in awfully handy at the times when you need a hefty chunk of data the most.

This post was update at 4:45 PM PT to clarify that rollover data will only kick in after customers use up their initial 10 GBs of free stash data.