Consumers may not be thrilled about the surprisingly placid wireless market lately, but carriers are well positioned to benefit from low churn and maybe even positive service revenue growth next year. And that’s particularly good news for the nation’s two largest mobile network operators.
U.S. carriers have been notably passive recently despite the introduction of some compelling smartphones that would typically spark aggressive promotional campaigns, as Wave7 Research pointed out in a recent note to subscribers. In fact, at least two network operators are ratcheting up the price of service plans as some promotional offers are retired.
“iPhone 8 offers were modest and have now expired for two of four carriers,” Wave7 wrote. “iPhone competition was modest and centered around trade-ins. T-Mobile’s $20 price hike at the two-line level and Sprint’s upcoming $10 price hike for its ‘5 for $90’ switcher offer portend a lower level of competitive intensity in October. Reported M&A negotiations could be having a positive impact.”
Meanwhile, Comcast killed its $200 subsidy on high-end phones, BTIG Research reported, and Sprint’s recent offer of a free iPhone for customers who switch carriers and trade in other new models may end soon.
Those factors could be good news for Verizon and AT&T, both of which have seen T-Mobile and Sprint swipe postpaid smartphone customers in recent quarters as the market has become more competitive.
“Meanwhile, the lack of excitement around the iPhone 8 will likely keep customer switching low in Q3 and provide an incremental benefit to the dominant operators, AT&T and Verizon,” Walter Piecyk of BTIG wrote in a blog post. “With a lack of actual price cuts and the maturation of the accounting impact of phone payment plans, wireless operators are likely to focus investors’ attention on a possible return to wireless service revenue growth in 2018 on Q3 conference calls. That would be a notable and bullish milestone for the industry given the last three years of decline.”
The looming question, of course, is just how much the market will heat up during the all-important holiday shopping season. Apple will launch its iPhone X in a few weeks, giving carriers yet another opportunity to poach customers with a highly anticipated flagship phone, but whether that will spur another feeding frenzy among carriers looking to grow market share has yet to be determined.
“November will close with the usual Black Friday competition—and could feature Magenta Friday as well,” Wave7 wrote, referring to T-Mobile’s brief holiday campaign last year that offered two additional lines free to both new and existing customers with family plans. “On 11/3, the iPhone X will launch in stores, providing a competitive catalyst not seen in past years. Based on recent carrier activity, trade-in offers seem likely.”