AT&T is now bigger than Verizon? Think again

Sue Marek
Analyzing the financial metrics of any company, particularly a wireless operator, has never been an easy process. As any financial analyst will tell you, companies don't always count things the same way. In fact, most public companies work very hard to find ways to cleverly arrange numbers to make their results look better and stronger than those of the competition.

That's exactly what appears to be happening right now in the wireless industry with a certain metric for connected devices. Traditionally, wireless operators have counted their subscribers the same way. One rate plan equals one subscriber. Then operators starting getting more specific about those numbers, breaking out how many subscribers were postpaid vs. prepaid, how many were on family plans and how many were direct vs. wholesale customers.  

But now that operators are connecting much more than wireless phones to their networks, it has become increasingly difficult to tell exactly what constitutes a wireless subscriber. AT&T Mobility (NYSE:T) has started counting its consumer connected devices as part of its wireless subscriber count--meaning that ereader owners, iPad users and anyone who buys a consumer device with AT&T connectivity will get included in AT&T's subscriber count.

Yesterday, when AT&T reported that it had added a whopping 2.8 million net adds in the fourth quarter, giving it a total of 95.5 million subscribers, many assumed that AT&T had surpassed Verizon Wireless (NYSE:VZ) in total wireless subscribers. In fact, some blogs and news sources even wrote articles proclaiming that AT&T was now the largest wireless operator in the U.S. 

But it's not that clear-cut. Just days earlier, Verizon Wireless reported that its fourth quarter net adds were 955,000, bringing its total subscriber base to 94.1 million. But if you look closely at Verizon's numbers, you will see that Verizon and AT&T are not counting subscribers the same way. Verizon said that it had 8.1 million "other connections," which it defines as machine-to-machine and telematics. And if you add that 8.1 million to its 94.1 million traditional wireless subscribers, the company has a total wireless connection base of 102.2 million as of year-end. 

The issue is not just how Verizon or AT&T or any other U.S. operator counts a subscriber, but how the industry defines a wireless subscriber in today's world of connected devices. If I purchase a wirelessly connected dog collar, does that mean that my dog is now a wireless subscriber? And if my utility meter has a wireless connection to deliver data to my utility company, is it a subscriber?  

I don't have an easy answer, but I do think wireless carriers need to come up with a standard way to report their wireless connections to the network. Without consistency among the operators, the financial community and the media will just continue to be confused and that will lead to more inaccurate articles and poor financial guidance. --Sue