Did OnStar contribute to Verizon's 490,000 wholesale customer losses in Q4?

Although Verizon Wireless (NYSE:VZ) added a total of 1 million net connections in the fourth quarter, the company also said it lost 490,000 wholesale and other connections in the quarter and it attributed those losses in part to a decline in telematics customers.  While company spokeswoman Robin Nicol declined to provide more specifics on those losses, analysts and sources in the M2M industry believe that the decrease likely came from customers of General Motors' OnStar service, which uses Verizon's network.

"While the wholesale channel grew during the fourth quarter, a loss of telematics customers resulted in a net decrease of 490,000 wholesale and other connections in the quarter," Verizon said in a statement announcing its fourth-quarter earnings.

Verizon has long had a partnership with OnStar to provide wireless telematics for the in-car service, and analysts said that they believed Verizon is removing OnStar customers who are no longer active, paying customers. "OnStar is clearly the dominant player in telematics," said John Canali, an analyst at Strategy Analytics. "I think you are correct in your assumption that these are OnStar users who have chosen not to renew the service after a free trial period, or who have elected to find another source of navigation or hands-free calling."

Roger Entner, an analyst at Recon Analytics (and FierceWireless contributor), said he believed the losses were due to Verizon conducting a database cleanup of its M2M connections. He said carriers typically do this every quarter to eliminate customers who are no longer paying for service, and thus are no longer considered active data connections. Interestingly, in late September OnStar said it would not keep a data connection to customers' vehicles after they cancelled OnStar service, reversing a prior policy change.

OnStar is still active in its relationship with Verizon, however. Earlier this month at the Consumer Electronics Show, Verizon and OnStar unveiled a second-generation LTE-enabled research vehicle in the form of a Chevrolet Volt. The car will be connected to the cloud via LTE and the companies demonstrated streaming content and other infotainment options.  

For more:
- see this release
- see this article on Verizon's Q4 earnings

Related Articles:
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