As MetroPCS, Leap and Cincinnati Bell networks shut down, it's regional trench warfare for carriers

Phil Goldstein

Wireless carriers have always battled with each other to encourage customers to switch to a new carrier. But that fight is now starting to heat up in select markets across the country because of a confluence of network shutdowns, technology transitions and smaller carriers exiting the business.

Although these market-by-market battles don't get much national attention, they're still worth watching--after all, millions of subscribers scattered across dozens of markets are up for grabs.

Here are some of the shutdowns, transitions and exits that are at play:

  • T-Mobile US (NYSE:TMUS) is gradually shutting down CDMA service in legacy MetroPCS markets and the carrier is working to encourage those subscribers to move onto its GSM network. Already, in July, the company said 92 percent of CDMA MetroPCS customers in Boston, Hartford, Conn., and Las Vegas moved onto T-Mobile's GSM/HSPA+/LTE network as those networks were shut down. T-Mobile is shutting off CDMA service in Philadelphia soon and other major markets like Dallas, Detroit and San Francisco are going to follow next year. T-Mobile aims to have all of MetroPCS' legacy CDMA gear decommissioned by the end of 2015. Each of those market shutdowns represents ripe opportunities for other carriers to try to steal away Metro's customers--and T-Mobile will need to defend its turf.
  • AT&T Mobility's (NYSE: T) Cricket prepaid brand is aggressively trying to migrate its own CDMA customer base to AT&T's GSM/HSPA+/LTE network. Cricket President Jennifer Van Buskirk recently said the company is ramping up its retail presence and preparing to aggressively fight for customers and respond quickly to competitive offers. Cricket is also expanding sales into 2,800 GameStop retail stores nationwide, which should give the company more flexibility in targeting customers from other carriers. Cricket hasn't yet outlined exactly which CDMA markets it will shut down and when, but the rest of the industry's carriers likely will use those shutdowns to chase Cricket's CDMA subscribers.
  • Cincinnati Bell Wireless, which was the eighth-largest facilities-based carrier in the U.S. in the second quarter, is selling its spectrum to Verizon Wireless (NYSE: VZ) and shutting down service on Feb. 28, 2015. Verizon is the obvious carrier to pick up those customers, but since August CBW has been waiving contract termination fees for customers who want to change carriers. In other words, CBW's subscribers are up for grabs for any competitor.
  • Smaller carriers are also exiting the business. Airadigm's AirFire Mobile brand shut down and the company sold its spectrum and network assets to U.S. Cellular (NYSE:USM) in Wisconsin, Iowa, Minnesota and Michigan. Cellular One shut down service in Montana and Wisconsin, and Cellular One worked with AT&T Mobility (NYSE: T) to transition its customers to AT&T.

Obviously, there are a large number of opportunities in the market for savvy carriers to pick up extra customers in these markets. For example, Cincinnati Bell counted 277,000 subscribers at the end of the second quarter--that's not the greatest prize in the world, but it's still a substantial subscriber base.

In response to these market changes, some carriers are playing both offense and defense. "We are taking a very deliberate approach to repurposing the MetroPCS spectrum, going market by market and learning as we go, making things easier and smoother for customers in the future," T-Mobile said in a statement. T-Mobile added that its MetroPCS customers can upgrade their handsets to new HSPA/LTE smartphones in most cases for little or no extra cost.

Indeed, as T-Mobile works to retain its MetroPCS customers, it's also on the hunt for other switchers. T-Mobile just lit up LTE service in the Cincinnati metro area, and the carrier specifically noted that "our local T-Mobile stores are excited to show Cincinnatians, especially Cincinnati Bell Wireless customers looking for a more superior option than Verizon, what the Un-carrier can deliver."

Cricket is getting into the fray as well. Spokeswoman Nneoma Njoku noted that customers who switch from T-Mobile, MetroPCS and Cincinnati Bell will receive a $100 bill credit through Nov. 2.

U.S. Cellular spokeswoman Katie Frey said the carrier is "definitely open to this type of targeted marketing in areas where opportunities arise." For example, she said last year the company launched a targeted campaign in northern Wisconsin when AT&T purchased Element Mobile.

Current Analysis analyst Lynnette Luna said a lot of the switching will come down to offers carriers make regarding devices and upgrades. "I don't think we'll see huge pricing changes, but we'll see more aggressive switching offers and better upgrade offers so that [customers will] stay," she said.

There are several factors that make this moment unique, Luna noted. In the past, carriers did not generally acquire companies that had different underlying network technologies--a GSM carrier wouldn't buy a CDMA carrier, for example. "In the past we saw acquisitions that had to do with technology alignment," such as Verizon and Alltel, she said.

However, with the transition to LTE, that doesn't matter as much. "CDMA handsets are not as competitive anymore," Luna said, adding that the industry-wide migration to LTE makes transitioning legacy customers that much easier.

The battle that is taking place in these markets across the country will continue and expand into next year. It's not the biggest or most important fight in the wireless industry, but it's still significant. It won't make many headlines because it's not national--but this is the trench warfare carriers are waging to get as many customers as they can when they can. These regional transitions offer a vivid example of market competition in earnest.--Phil