iPhones, LTE and connected devices drive carriers' Q2 results

Mike Dano
As the second-quarter reporting season comes to a close, it's time to start parsing the information to see which carriers slipped and which managed to get ahead.

Here are some of the big themes from the quarter:

LTE and 4G
LTE captured a lot of the headlines in the second quarter. Leading the charge was Verizon Wireless (NYSE:VZ), which announced another 1.2 million connections to its LTE network during the second quarter. As Strategy Analytics' Phil Kendall noted, "perennial over-achiever NTT DoCoMo managed just under 0.1 million new LTE connections" in the second quarter, showing the Verizon's momentum is significant and powerful.

But the 4G push during the second quarter wasn't limited to Verizon. AT&T Mobility (NYSE:T) firmed up its LTE summer launch plans and expects to cover at least 15 markets and 70 million POPs by year-end. Sprint Nextel (NYSE:S) inked an agreement with LightSquared where it will get first refusal on up to 50 percent of LightSquared's LTE capacity (Sprint plans to detail its full 4G plans during an Oct. 7 investor meeting). And, not to be outdone, Clearwire (NASDAQ:CLWR) said it will deploy an "LTE-Advanced-ready" network just as soon as it manages to scare up an extra $600 million.

(Interestingly, LightSquared and Clearwire are both chasing extra funding--LightSquared said it needs around $3 billion and Clearwire said it needs around $600 million, though the recent troubles on Wall Street could hamper those fundraising initiatives.)

Even U.S. Cellular is getting into the 4G LTE game, promising to deploy LTE to 25 percent of its customer footprint before the holidays.

Smartphones, and the iPhone
Verizon Wireless activated 2.3 million Apple (NASDAQ:AAPL) iPhones during the second quarter, while AT&T activated 3.6 million iPhones. According to Current Analysis' Weston Henderek, these numbers are particularly impressive when one considers that AT&T had only 331,000 postpaid net adds, while Verizon Wireless had 1.3 million for the second quarter. In addition, having the lower priced iPhone 3GS and a $15 entry level smartphone data plan likely accounted for the iPhone sales advantage that AT&T had over Verizon Wireless during the quarter.

Click here for Strategy Analytics' list of the top 10 carriers in the United States in the second quarter.

Further, smartphones represented a major part of the prepaid market. Leap Wireless (NASDAQ:LEAP) said that nearly 50 percent of its new handset sales in the second quarter were for smartphones and Muve Music devices, while MetroPCS (NYSE:PCS) said 38 percent of all of the handsets the company sold in the quarter were Android handsets. Henderek said that "in many cases, monthly prepaid plans bundled with smartphones now command premium rate plan pricing when compared to similar offerings with feature phones. In addition, the focus on the more profitable monthly prepaid segment has reduced the emphasis on lower end prepaid offerings. As a result, prepaid providers were much less aggressive on pricing during the second quarter."

Connected devices overtake phones
As Recon Analytics' Roger Entner pointed out: "For the first time in the U.S. wireless history, non-operator branded wireless connections are the majority source of customer additions." Entner said that almost half of the increase of mobile connections came from customers that are mostly unaware of the network they were actually using: Amazon Kindles, Barnes & Noble Nooks, countless other connected devices, and MVNOs such as TracFone drove the growth of the industry with more than 52 percent of net additions.

For a complete analysis of wireless carriers in the first quarter, make sure to check out Strategy Analytics' list of the top 10 carriers in the United States in the second quarter. +Mike Dano

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