Verizon top ‘donator’ of customers to competitors in Q2: Cowen

Fewer customers are willing to pay top dollar for coverage as the network gap between carriers has narrowed.

Verizon lost more customers to its competitors than any other major U.S. wireless carrier in the second quarter, according to Cowen and Company Equity Research.

Cowen’s quarterly survey of U.S. wireless users fund that Verizon saw more customers who had been with their carrier for less than two years switch to another service provider than any of its rivals during the quarter. That not only underscores a wireless market that has grown extremely competitive over the last two years, it also suggests customers may be less willing to pay top dollar for superior coverage as the network gap between service providers has narrowed.

“The results in our view reflect Verizon’s late response to increasing pricing competition and an increasingly difficult-to-justify pricing premium for its promised leadership network experience,” Cowen’s Colby Synesael wrote in the report, which was released this morning. “The last time this was the case was in our 2Q14 survey and (that), importantly, does not reflect a trend (but) adds validity to the argument that the company has become vulnerable to the same competitive threats that hurt AT&T early on.”

Verizon may still be paying a price for being late to the unlimited data party. While both T-Mobile and Sprint moved aggressively to launch unlimited offerings last August, Verizon nearly had to be dragged kicking and screaming to unlimited.

Verizon launched an unlimited data plan in February, joining the three other major U.S. wireless carriers and reversing its long-held opposition to unlimited data. T-Mobile has blasted Verizon’s network since the launch of unlimited, citing data from Ookla that indicates increased traffic may be slowing data speeds for Verizon customers, but Verizon clearly had no choice: the carrier posted a net loss of 289,000 postpaid phone customers in the first quarter of 2017 but said it was on pace to lose nearly 400,000 of those users before it launched an unlimited plan.

Meanwhile, Cowen found that the brand improvements of both T-Mobile and Sprint are “at or near survey record highs.” More than 26% of respondents said the brand/image of both carriers was showing improvement during the second quarter.

“Despite the results, our brand/ranking analysis shows the two carriers remain a distance from #2 carrier AT&T, but rather are in a dead heat for the #3 position,” Synesael wrote. “Interestingly, despite Verizon’s heightening vulnerability and slightly slipping in brand/image in the last two quarters’ survey, the carrier’s brand/image still commands a solid #1 position. We suspect Sprint and T-Mobile could gain ground over the next year as they leverage (or at least claim) near-network parity and enter new markets.”