Cellular technologies and carriers, who does what, market share

Technical Breif


Introduction

Cellular technology is something that has lots of change in the past 10 years. Cell phones and radio broadcasting technology have seen rapid development and exponential growth. This technical brief will cover the Cellular Technologies, Carriers, Who does what, and Market share in the United States. The big four carriers are seeing more competition than ever with new entrants in the market and foreign corporations buying stock in domestic companies. Before we start looking at the market today I think it would be beneficial to look at the history of the Telephony industry. Most of the carriers that we know today are a result from the break of Ma Bell. The telecom industry 40 years ago was heavily consolidated, and competition was a rare sight. AT&T had a monopoly on nationwide and local calling, which was supported by the government for a long time. "Colloquially known as Ma Bell, the communications giant lost its government backing in the 1980s when charges were filed against it under the Sherman Antitrust Act." [1] After this ruling AT&T had to split up into many small companies which were popularized as baby bells. The government went through all this trouble so that a few companies wouldn't have the whole telecom market to themselves. However, today that consolidation is coming back in full force. Cellular Carriers have seen a lot of consolidation as of late. T-Mobile acquired MetroPCS in 2013, and went public later that year. There have also been many failed buyout attempts in just the last 5 year, both AT&T and Sprint tried to buy T-Mobile.

Cellular Technologies

Broadcasting technology has seen lots of improvement in the last 10 years. We now have radios that can handle transfer speeds over gigabit speeds to mobile devices. This is something that was not even imaginable just 5 years ago. 4G LTE is the market leader right now, in fact North America is the Market leader for 4G LTE adoption. All the major carriers are now using it, and even the smaller carriers are moving to the new technology. However on the horizon 5G is very close, which is surprising because the standards for the network still have to be developed. Most of the US carriers have expressed interest in 5G wireless technology. In Fact they seem to be more excited about it uses other than for mobile phones. Verizon has plans to use the 5G service as a way to launch a new wireless ISP across America. This would be lead to profound cost savings and faster internet speeds to the majority of Americans. T-Mobile on the other hand hasn't said anything about a wireless ISP service, but they are looking very closely at the IOT(Internet Of Things) market. They believe that IOT will lead to the next billion devices coming online. They also launched a new service this week called Digits. Digits allows you sim to operate as a virtual sim, so that you can have multiple phone numbers on the same device. This is a very new technology and none of the other carriers have anything like it. Sprint hasn't said anything about their 5G plans, which is for the best in my opinion. They have had a lot of trouble meeting their projections and even just maintaining their network. It would be more beneficially for them if they focused on improving their network reliability. ATT has expressed interest in both the IOT space and the wireless ISP space. ATT has an advantage over the carriers in that they have a very low Churn ratio at 1.45%. This means that for every month they are losing around 1.45% of their customers which is offset by the new incoming customers. They have a solid customer base and they hold a lot of potential for future expansion.

Cellular Carriers

Sprint

Sprint is now the 4th largest carrier in America losing its 3rd place spot to T-Mobile. They currently have 59 million subscribers Sprint was founded 117 years ago as Brown Telephone Company, so this company has a long history. They have been relevant in the telecom space for many years, but they are going through a rough patch right now. They haven't been able to retain their customers as well as the other carriers. 80% of Sprint is owned by SoftBank, a Japanese telecom, and they have been providing funding for network upgrades. Sprint is actually in the best position when looking at just spectrum holdings. "Sprint owns a vast amount of spectrum for LTE thanks to the 2.5 GHz spectrum holdings it acquired from Clearwire. Sprint controls around 120 MHz of 2.5 GHz spectrum in 90 percent of the top 100 U.S. markets, and plans to deploy two-carrier 2.5 GHz spectrum, or 40 MHz in the band, by year-end."[2] "However, the 2.5 GHz spectrum has weaker propagation characteristics than low-band spectrum, requiring more towers for Sprint to build it out." [2] This is one of the main reasons why Sprint cannot build out their network as fast as T-Mobile. The 2.5GHz offers lots of bandwidth but it is not good at penetrating walls or covering vast areas of land. These days Sprint is doing a leaseback deal using the 14% of the spectrum they own. This was a move that saved them $170M because they could pay off high interest loans with the money gained. They are doing everything they can to retain customers and lower costs throughout the whole company.

T-Mobile

T-Mobile is now the third largest carrier taking Sprint's spot this past year. They have 69 million subscribers, up by . This shows that the leadership at T-Mobile have been taking the right set of actions to grow the company at a very fast rate. In Q3 2016 T-mo added 1,970,000 new customers and of that 1 million were postpaid smartphone customers. [3] "T-Mobile is using up to 5 MHz of its 700 MHz spectrum combined with up to 20 MHz of its AWS spectrum for LTE."[2] Tmo uses their AWS and 700 MHz in combination to achieve record internet speeds on mobile smartphones. In fact T-Mobile is the fastest carrier in the United States. Because of the position they are in T-Mobile rarely sits on spectrum, as soon as it cleared by the FCC T-Mobile will start working on bringing the new spectrum online. T-Mobile is the only carrier lacking the sufficient spectrum that's needed to build out their network nationwide. They are trying to fix this situation in the next spectrum auctions, they have said in the past that they are willing to spend around $10 Billion for 600 MHz nationwide. This could be great news for T-Mo if they are successful in the bidding process. If they acquire at least 10 MHz nationwide of the 600 MHz they could become serious competitors to the big two carriers.

Verizon

Verizon is the largest carrier in America with 144 million subscribers, unsurprisingly they also make the most money out of the top 4 carriers. Verizon has vast spectrum holdings and they are only growing bigger. "Verizon Wireless' (NYSE: VZ) 700 MHz LTE network covers around 306 million POPs. The carrier has also been busy deploying its LTE service on its 1700/2100 MHz AWS spectrum to bolster its network capacity." [2] Because of its dominant position in the market they can advertise in ways that other companies would try to do. For example, carrier aggregation is not something new, tmobile and sprint have been doing that for a while. However Verizon just started and they felt that Carrier aggregation deserves a new name, so they rebranded it XLTE. The advertise XLTE as the next revolution in mobile tech but anybody with a little knowledge of the subject would know how much false advertising that is.

AT&T

AT&T is the second largest carrier in the united states and they have 133 million customers. AT&T Mobility's LTE network covers 290 million POPs on its 700 MHz spectrum, which is a 10x10 MHz deployment in most markets, though in some it is a 5x5 MHz deployment. The company plans to deploy LTE on its AWS spectrum as well, which in some cases will be a 5x5 MHz deployment and in others 10x10 MHz. ATT is doing more investment on their entertainment side rather than their wireless infrastructure. They acquired DirecTV last year, and they recently launched DirectTV Now, a Over-the-top service with provides TV service to anyone with internet service. They are however activating three channel carrier aggregation nationwide, and only some new phones like the new iPhones and Galaxys will be able to realize the benefits as they require new antennas in the phone.

Looking into the future

Now you may have noticed just how much bigger AT&T and Verizon are compared to Sprint and T-Mobile. The chairman of Sprint wanted to merge Sprint with T-Mobile so that they would have enough customers to compete properly with the Duopoly(VZ and ATT). However there have been some recent developments regarding this merger idea. With Donald Trump in office the FCC seems to be accepting of a deal between Sprint and Verizon, and personally I think this would be the best move. Instead of Sprint and Tmobile competing with each other they would be competing with Verizon and ATT. This would the fight to watch, as a combined company they could compete more effectively against the top 2 carriers.

Conclusion

Cellular technology has leapfrogged landlines in third world countries, and soon they won't need to build broadband infrastructure. In many places around the world it makes more sense to just build out an LTE cellular network rather than trying to lay copper or fiber to the houses. The market has never been more healthy, network operators are preparing their network for the next generation broadcasting technology called 5G. It seems that we will soon have faster internet speeds on our phones than our computers at home with ISP service. The future seems to be wireless based, and I look forward to it. Once we have 5G service in place I don't see why people wouldn't want to replace their ISP service with something that is cheaper and faster. In the next ten years I think the whole industry will be transformed, whether it be through consolidation or new companies. The days of sitting around and not innovating are coming to an end.

The Carriers


Sprint

The fourth largest carrier with 59 million customers.

Sprint

Verizon

The largest carrier with 144 million customers.

Verizon

AT&T

The second largest carrier with 133 million customers.

Mountain View

T-Mobile

The third largest carrier with 69 million customers.

T-Mobile

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References


Beattie, Andrew. "Why Is the 1982 AT&T Breakup Considered One of the Most Successful Spinoffs in History?" Investopedia. Investopedia, 27 Aug. 2009. Web. 08 Dec. 2016.

Goldstein, Phil. "How Much LTE Spectrum Do Verizon, AT&T, Sprint and T-Mobile Have - and Where?" FierceWireless. QUESTEX, 2 Feb. 2016. Web. 08 Dec. 2016.

Dano, Mike. "How Verizon, AT&T, T-Mobile, Sprint and More Stacked up in Q3 2016: The Top 7 Carriers." FierceWireless. QUESTEX, 11 Nov. 2016. Web. 08 Dec. 2016.

Dano, Mike. "AT&T: We Are Deploying 3-channel Carrier Aggregation on LTE Network." FierceWireless. QUESTEX, 14 Sept. 2016. Web. 08 Dec. 2016.

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