The U.S. wireless industry is undergoing dramatic changes, and continued to bifurcate in 3Q09, according to industry analysts TBR. On one end of the spectrum, Verizon Wireless and AT&T continue to take advantage of the growing adoption of smartphones and the resultant data revenue, maintaining their industry-leading performances.

At the other end, operators such as Sprint and T‑Mobile USA experienced net subscriber losses and increased their focus on the low-end, prepaid market, where they face intense competition from MetroPCS, Leap Wireless and MVNOs such as TracFone.  In TBR’s view, the hyper-competitive environment for prepaid service in the United States raises the likelihood that Leap Wireless and MetroPCS could merge in 2010. 

According to NBQ Director John Byrne, “The Leap/Metro merger scenario has been around for years but has never come to pass, largely due to longstanding bad blood between the two companies.  But with both operators falling fall short of growth targets recently, both sides may be ready to put differences aside and come back to the negotiating table.”

• Verizon Wireless maintained the lead in TBR’s Mobile Operator Benchmark, aided by continued subscriber and revenue growth – though at a pace that has slowed steadily over the past five quarters. To differentiate itself in the market and maintain future revenue growth, Verizon Wireless is employing two overarching strategic initiatives: leadership in LTE technology and aggressive adoption of the Android platform.  
• AT&T took the No. 2 position in the Mobile Operator Benchmark, continuing to benefit from strong iPhone sales; however, the company is bracing for a challenging 2010, when its iPhone exclusivity is likely to expire.
• Meanwhile, Sprint’s wireless financial results continued to deteriorate in 3Q09: its revenue decline worsened; its operating loss widened; and it was plagued by subscriber losses. Sprint’s greatest strength continues to be its Boost Mobile unlimited prepaid offering, the only one of its subscriber segments to grow during the quarter.
• T‑Mobile USA’s disappointing 3Q09 results included a net loss of 77,000 customers. The company did make a major step forward from a technology standpoint, deploying HSPA+ technology in its first market, Philadelphia, in September, with plans for widespread deployment by mid-2010.

As smartphone usage grows, mobile operators increasingly rely on device differentiation to woo subscribers. Since the launch of the first Android device more than a year ago, the operating system has earned a reputation as a valid option in the smartphone market. With acceptance from all four of the largest U.S. operators, Android continues to improve with each upgrade, and is becoming a staunch competitor to Apple’s iPhone OS. TBR believes Android handset sales may exceed iPhone sales in 2010.

With smartphone usage growing and subscribers expecting fast data connection in any locale, TBR notes that operators are embracing Wi-Fi hotspots as a means to provide high-speed connectivity in new locations and offload data traffic via the fixed network. The analysts expect this trend to accelerate in 2010 and beyond as emerging devices such as netbooks increase in popularity and as LTE deployment drives yet more data usage.

About TBR

Technology Business Research, Inc., headquartered in Hampton, N.H., is recognized as one of the leading high-tech market research and consulting firms specializing in the analyses of computer, software, networking equipment, wireless, portal and professional services companies, as well as customer satisfaction studies. Serving a domestic and international clientele of high‑tech manufacturers, IT professionals, end users and financial executives, TBR provides timely and accurate market research and business intelligence in a format that is uniquely responsive and tailored to clients’ needs. TBR analysts are available to further address client‑specific issues or information needs on an inquiry or proprietary consulting basis.

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