Re: Disappointing 1Q CY08 for AT&T. iPhone helps Revenue, but AT&T continues to fall far behind Verizon in both total retail customers and in new Wireless Customers

> "Mike M" <mikasn@swbell.net> wrote in message
> news:8BVRj.7855$iK6.794@nlpi069.nbdc.sbc.com...
>> But no argument over their crippled handsets. Amusingly, while Motorola
>> continues to lose market share, one advantage they have, but can't
>> advertise, is that it's easy to uncripple the handsets they cripple for
>> Verizon.
> Verizon is still #2 carrier.
> Can you hear me now?
> My Verizon friends usually get my call/voicemails hours later.
> Hmmm.

Maybe it should be, "Can you hear me yet?"

Mack

Todd Allcock wrote:

> [While not really directly related to the topic at hand, I'm sorry- I'm
> just too weak-willed to pass a up a slight jab at the iPhone: at the very
> BOTTOM of the reasons to switch carriers was "the desire for a specific
> phone (3%)." It does help explain, however, why carriers don't seem to be
> negatively impacted by lousy handset selections.]

What makes you think they're not impacted? If Verizon were able to offer
the plethora of handset choices enjoyed by the GSM community, they'd
probably be increasing their lead over AT&T at a greater rate than they
are now.

Also, the RCR survey was about why people switch carriers, but what they
should have looked at is why people stick with a carrier. Look at the
big difference in churn rates, where Verizon has always enjoyed a
significant advantage.

"SMS" <scharf.steven@geemail.com> wrote in message
news:JnsSj.3365$1b7.2487@newssvr13.news.prodigy.ne t...
> Todd Allcock wrote:
>
>> [While not really directly related to the topic at hand, I'm sorry- I'm
>> just too weak-willed to pass a up a slight jab at the iPhone: at the very
>> BOTTOM of the reasons to switch carriers was "the desire for a specific
>> phone (3%)." It does help explain, however, why carriers don't seem to
>> be
>> negatively impacted by lousy handset selections.]
>
> What makes you think they're not impacted? If Verizon were able to offer
> the plethora of handset choices enjoyed by the GSM community, they'd
> probably be increasing their lead over AT&T at a greater rate than they
> are now.

Again, if only 3% switch because they want a particular handset, it stands
to reason that people generally choose a carrier first, and phone second.
Ergo, the actual handsets offered matter very little. (Also reflected in
carriers advertising- the actual handsets are usually just tagged on the end
of the ad proclaiming the value of the network/fewer dropped calls/cheap
monthly rate/texting package, etc.)


> Also, the RCR survey was about why people switch carriers, but what they
> should have looked at is why people stick with a carrier. Look at the big
> difference in churn rates, where Verizon has always enjoyed a significant
> advantage.

The best of a field of bad numbers- even Verizon's stellar (by comparison)
churn percentage still means 1 out of every 7 or 8 customers bolt each year.
Hardly a number to be proud of (again, except by comparison.)

On 2008-04-29, SMS <scharf.steven@geemail.com> wrote:
> For Q1 CY08:
>
> Verizon added 1.5 million customers, 1.3 million of them postpaid retail
> contract customers. ARPU was $51.40.
>
> AT&T added 1.3 million customers, 705000, of the postpaid retail
> contract customers. So nearly half of their net additions were
> low-profit prepaid and MVNO customers. ARPU was $50.18.

The Verizon number is wrong. AT&T's ARPU was $50.18, but Verizon's
was $50.91. There's a 1.45% difference between those numbers.

You've never really explained why, if Verizon's customer base is
so high quality and high paying while AT&T's customer base has so
many low-revenue customers, that each company's average take from
each customer for service is pretty much identical. Either AT&T's
MVNO customers must produce almost as much revenue as their
retail customers, or AT&T's retail customers must provide more
revenue per user than Verizon's to make up the difference. In
either case the numbers make it clear that there's not a lot of
difference (1.45%) between the average AT&T and average Verizon
customer, at least not a lot which matters to the top line.

> OTOH, AT&T beat Verizon in wireless revenue, $11.8 billion to $11.7
> billion, and much of that is attributable to the higher ARPU from iPhones.

I have no idea how you concluded the iPhone had anything to do with
anything at all. Mathematically speaking the obvious reason is simple:
AT&T and Verizon have almost the same ARPU, but AT&T has more users
so AT&T has more service revenue.

The more interesting question is how Verizon, with the same ARPU as
AT&T and significantly fewer users, has managed to stay so close
to AT&T in terms of overall revenue (in fact this is the first quarter
I remember where AT&T's revenue has exceeded Verizon's). The difference,
of course, is that Verizon's revenue from equipment sales are significantly
higher than AT&T's, about 60% in past quarters though I haven't looked
for the numbers this quarter. At least some of that difference has to
do with the fact that MVNO customers generally produce no equipment revenue
for AT&T, but the remainder probably has a lot to do with Verizon's
snail-like pace at allowing phones from third parties to be used on
their network. Equipment control is a small goldmine for Verizon.

Dennis Ferguson

Dennis Ferguson wrote:

> You've never really explained why, if Verizon's customer base is
> so high quality and high paying

I never claimed that the customer base is high paying. On numerous
occasions I've shown price comparisons that prove that Verizon is
usually no more expensive than other carriers.

ARPU is not necessarily a good indicator of what the average person
pays, as it's the mean, not the mode. The slightly higher ARPU is
probably because Verizon has a lot more business customers, while AT&T
is catching up because of the higher cost plans for the iPhone.

"SMS" <scharf.steven@geemail.com> wrote in message
news:8EISj.8180$LQ4.2566@newssvr11.news.prodigy.ne t...

> I never claimed that the customer base is high paying. On numerous
> occasions I've shown price comparisons that prove that Verizon is usually
> no more expensive than other carriers.

Comparisons that neglect the perks other carriers offer that might allow
customers to select a lower tier rate plan, i.e. rollover, earlier nights,
unlimited circle/fave calling, etc.

> ARPU is not necessarily a good indicator of what the average person pays,
> as it's the mean, not the mode. The slightly higher ARPU is probably
> because Verizon has a lot more business customers...

Or, it could be the data- the difference in ARPU is roughly equal to the
difference in data ARPU. That slight difference might actually be
attributable to the wholesale customers, who aren't typically offered access
to data plans.

> while AT&T is catching up because of the higher cost plans for the iPhone.

Perhaps, but the 2+ million iPhone customers are a relatively small
percentage of AT&T's 70+ million customer base, so the iPhoners can't really
tip the scales very far in that direction, although I've seen reports that
the iPhone customer ARPU is over $90.

Again, the difference between AT&T and Verizon in terms of revenue is small
enough to be, essentially, a non-issue.