Wireless Operator Strategies

Wireless Operator Strategies provides both a deep and broad perspective of the operator market, combining granular operator-level and market-level data with ecosystem-wide understanding of wireless operator challenges and opportunities.

August 7, 2013 14:12 Phil Kendall

Hot on the heels of O2, Vodafone has announced plans for another UK LTE network launch on 29th August. Its services will go live in London with a further 12 cities switched on by the end of the year. Vodafone has been a little more forthcoming with details of its pricing strategy: what initially looks like a service which comes with the almost-standard European approach of a 4G price premium is anything but that.

At the risk of over-simplifying, it can be summarized as a £5/month surcharge for LTE which offers users double the (3G) data allowance and also gives consumers the added benefit of bundling in either Spotify Premium or Sky Sports Mobile TV. In our recent report "Monetizing 4G LTE: Evolution of Pricing & Go-to-Market Strategies" we had highlighted content bundling as a trend to watch in LTE pricing as operators look to enhance value in the market.

So what that £5 surcharge for 2x the data actually does is move users up a tier in the existing Vodafone Red pricing AND gives them the free bundled content. For example, the differences in SIM-only standard Red and 4G-ready options highlight the fact that at each price point there is more value in the 4G option:

  • Red (3G) – £21/month for unlimited voice/text and 1GB data
  • Red 4G-ready - £26/month for unlimited voice/text and 2GB data and Spotify or Sky Sports
  • Red L (3G) – £26/month for unlimited voice/text and 2GB data
  • Red 4G-ready L – £31/month for unlimited voice/text and 4GB data and Spotify or Sky Sports
  • Red XL (3G) – £31/month for unlimited voice/text and 4GB data
  • Red 4G-ready XL - £36/month for unlimited voice/text and 8GB data and Spotify or Sky Sports

This model also exists if current Red customers want to add 4G and for customers taking out a new Red contract with subsidized handset. This approach keeps 4G out of the entry-level pricing option (we noted earlier this year that 60% of EE’s smartphone connections were on its 1GB plan) but certainly gives consumers a good reason to buy into the larger bundles.

This is a surprisingly aggressive pricing play from Vodafone and we believe that, perhaps more than Three’s plans to price 4G at 3G levels, this is a move which EE will struggle to ignore. EE still has a good medium term coverage and long term capacity advantage in the market, but Vodafone has certainly dented its expectation that competitor launches would vindicate its premium pricing approach.

August 1, 2013 11:23 Phil Kendall

Telefonica's O2 has announced a 29th August launch date for its UK LTE network, signalling the end of EE's ten month exclusive 4G play. With UK regulator Ofcom announcing this week that analogue TV signals have now completely vacated the band, O2's 800MHz network will cover five million people at launch in London, Leeds and Bradford. It will expand the network at a rate of two million people per month, with 13 cities to be covered by the end of 2013, and is sticking to its target of 98% 4G coverage by end 2015.

Tariffs will start at GBP26/month, higher than EE's GBP21/month SIM-only plan, though O2 has yet to reveal what is bundled in at that price. What seems clear, and what we expected in our recent report "Monetizing 4G LTE: Evolution of Pricing & Go-to-Market Strategies", is that this pricing level is consistent with one of the two standard 4G pricing approaches we have seen in Europe so far:

  • LTE priced with a premium/surcharge over 3G services;
  • LTE positioned at the higher end of standard tariff ranges.

O2's existing 12-month SIM-only tariffs range from GBP8 (100 minutes, unlimited text, 100MB data) to GBP26 (unlimited minutes/text, 2GB data) and it seems likely that O2 may have combined the above two approaches, rather than positioning LTE exclusively within its highest-level tariff. In a market where Three has already stated it will not charge a premium for LTE, it will be interesting to see more details on the O2 tariff range to see how the landscape will evolve in the medium term.

Irrespective of that detail, EE is unlikely to waiver from its premium LTE pricing approach. It is increasingly focused on talking up the performance and potential in its LTE network and, with its impressive spectrum holdings, its "biggest and fastest" claims are unlikely to be challenged any time soon. O2 has already acknowledged that it won't be able to match the speed in EE's "double speed" (2x20MHz) LTE locations, though its 2x10MHz in the digital dividend band at least allows it to build out rapidly. O2 will ultimately need to deploy LTE in higher frequency bands to meet bandwidth demands in urban areas (buying capacity off other players, or refarming its own spectrum), though it is worth noting that the LTE announcement comes in the same week that Ruckus Wireless announced an expansion of its relationship with O2 Wi-Fi. However well LTE develops, Wi-Fi will remain a key part of many mobile operators' data strategies.


July 15, 2013 21:15 Phil Kendall

Leap provides a good boost to AT&T’s spectrum position.

Leap principally owns PCS and AWS spectrum, the latter being an area where AT&T does not have much spectrum depth. As an extension of AT&T’s recent acquisition of WCS spectrum as part of a longer term wireless services opportunity, Leap represents a good short-term boost to AT&T. Leap has approximately 2.2 billion MHz POPs covering 136 million people. It has built out services to 96 million, of which 21 million are covered by 4G LTE. It would give AT&T the immediate ability to supplement 4G LTE services to those 40 million licensed but not covered  and, similar to the T-Mobile/MetroPCS deal, a Leap customer base with a relatively high churn and upgrade rate which could be rapidly migrated to a new network platform to make better use of the available spectrum.

The deal does not include Leap’s single 700MHz license, covering the Chicago area. Leap retains the right to sell this license and distribute the proceeds to its shareholders.

AT&T gains a stronger position in the AYCE prepaid market, with a sudden multi-brand strategy here.

Leap’s 5.2 million prepaid customers, of which 4.9 million are on its Cricket all you can eat (AYCE) brand, represent a significant boost to AT&T’s current 7.1 million prepaid customers. Strategy Analytics forecasts healthy growth in the US prepaid market and greater engagement from AT&T is a positive here. It has recently been building up the presence of its own sub-brand, Aio Wireless, to target the AYCE segment and this acquisition represents a significant boost to its prepaid operations and a good opportunity for knowledge transfer into Aio. To go from having no presence in this space to two brands, both of which will need significant support, may stretch AT&T’s resources, though Strategy Analytics does not expect the merger of these brands.

While Leap has not performed well in recent years, in particular pulling back from its expansion into mobile broadband services and, in the last year, discontinuing new connections to its PAYGo prepaid brand, its core Cricket brand has been relatively stable. Its Muve Music download service has proven popular as a benefit for subscribers. Yet both Cricket and MetroPCS have seen slow growth over the last three years as AT&T and Verizon Wireless have increased their share in the market, boosted by smartphones and 4G LTE, though they have begun to build healthy smartphone (and 4G) businesses of their own. With a better platform to extend the Cricket brand nationwide (without relying on wholesale deals), AT&T provides a good cost base from which to revive Cricket’s fortunes and compete against increasing pressure in the value segment from T-Mobile US.


  • Pressure on Verizon Wireless: With AT&T strengthening its positioning along with T-Mobile US and Sprint in targeting AYCE and no-contract space, Verizon Wireless may feel more pressure to engage with the AYCE market. Verizon Wireless has hinted at potential use of its 3G network with a separate brand, but could find that LTE AYCE offerings from competitors make an EVDO value proposition a weaker option.
  • Prepaid gets boost with another brand moving nationwide: The acquisition could provide a further boost to growth of prepaid and some potential economies of scale in migrating the Cricket brand away from CDMA. AT&T would do well to expand the innovative service offering nationwide
  • US Cellular the next to go? Now the only mid-size carry with more than 1 million customers so the only acquisition opportunity offering any meaningful market share gains. C Spire Wireless, a private company that is one of the larger remaining Tier 2 operators, has been focusing on personalized service and rewards to seek to create a more differentiated position as consolidation has increased competition from Tier 1 operators.




-Phil Kendall and Susan Welsh de Grimaldo, Wireless Operator Strategies (WOS) service

June 28, 2013 01:12 swelshdegrimaldo

Verizon stated this week that it is interested in entering the Canadian mobile market, and reportedly has made an offer for Wind Mobile (currently owned by Vimpelcom) and also approached Mobilicity.

Verizon sold off international assets after previous ventures, including divestiture of its interest in TELUS in Canada in late 2004 as part of a strategy to focus on its core wireless and broadband business in the US, so why now look at international again? With the US market maturing (although with continued growth potential), the timing may be ripe to revisit select opportunities in other markets, just as Softbank and others are looking at US investments to diversify.

Why Canada?

With a total of 27 million cellular subscriptions in the entire country at the end of 2012—less than a third of Verizon Wireless total subscribers—Canada would appear to offer only a small growth opportunity.

Yet Canada is attractive market for US carriers:

  • Relatively low mobile penetration for a developed market, with mobile Subscription Penetration by end 2013 under 82%, compared to nearly 116% in the US, as forecast by Strategy Analytics Wireless Operator Strategies service. In fact, mobile penetration in Canada is lower than in Mexico, which will reach just over 90% penetration in 2013 (see Worldwide Cellular User Forecasts, 2012-2017 )
  • High ARPU - Strategy Analytics Wireless Operator Strategies projects ARPU per subscription in Canada will be at US$56.45 compared to $45.61 in the US at the end of 2013.
  • Upcoming auctions for 700 MHz spectrum that may provide economies of scale and roaming with US carriers using 700 MHz bands for LTE, and provide opportunities for new competition with the leading three Canadian operators Bell, TELUS and Rogers
  • A market that is important for roaming to and from the US


With deadlines for applying to participate in the Canadian spectrum auctions looming in mid-September, Verizon and any other operators from the US or Europe eyeing the Canadian wireless challengers will have a busy summer working to clarify any acquisitions or investments.

Susan Welsh de Grimaldo, Wireless Operator Strategies

April 9, 2013 09:46 Phil Kendall

EE announced upgrades to its LTE network today, doubling bandwidth for its 4G services starting in the next couple of weeks.  It will be allocating 2x20MHz of its 1800MHz spectrum to LTE services in 10 cities by the Summer, extending that to 98% of the UK population by the end of 2012. This will see its top speeds increase to 130Mbps and average speeds increase from the current 8-12Mbps to over 20Mbps.

The roll-out will be phased as EE matches the extra radio capacity with backhaul upgrades needed at some sites. No consideration needs to be made for phasing upgrades in order to protect GSM services in the 1800MHz band, with the remaining 2x25MHz more than sufficient to deliver high-quality voice services into the remaining 2G customer base.

EE is also planning field trials of LTE-Advanced and VoLTE before the end of 2013, with LTE-A seeming to be the greater driver at the moment: its current CSFB-based voice services are performing very well and the operator would like to see much greater VoLTE device availability before making a commitment there.

For the first time, EE has also discussed customer targets for LTE, aiming for 1 million postpaid customers by the end of 2013. It released two useful statistics about current subscriber growth:

  • 1 in 4 new consumer and SME customers are picking LTE;
  • 30-40% of Orange and T-Mobile customers with 4G phones in areas where EE has deployed 4G are upgrading to 4G (for an extra £5/month) when this offer is made to them by the customer care teams.

We view 1 million as a very achievable customer target. In fact, EE could probably go a lot higher. It had 2.7 million postpaid gross additions in 2012, so only a modest increase in the current 25% LTE share would see it hit 1 million this year. The key here is LTE needs to fit in with other targets, in particular its aim to increase EBITDA margins from 21% in 2012 to 25% by 2014 and “buying” LTE growth through aggressive device subsidies or removing the service price premium is not going to help there.

Strategy Analytics' Wireless Operator Strategies team will be releasing a more detailed competitive assessment of this announcement for clients later today.

October 4, 2012 15:43 swelshdegrimaldo

Merging T-Mobile USA and MetroPCS makes sense on many fronts. For stakeholders, René Obermann, Chief Executive Officer of Deutsche Telekom, explained this merger “feels like unboxing a new smartphone to you” – discovering all the benefits. Strategy Analytics looks at some of the potential benefits—starting with spectrum as the main driver:


Both companies needed additional spectrum for stronger LTE deployments, and their contiguous AWS spectrum makes a good fit. As MetroPCS chairman stated in a call to go over the merger details, this deal allows for “minimum cost, time, and risk associated with acquiring spectrum”. For T-Mobile, they also get the benefit of PCS spectrum in some of their most spectrum constrained markets. The combined spectrum position, which will allow for 20x20 MHz LTE deployments in many markets, was noted by company leaders as “fundamental to deliver enhanced customer experience.”

Seamless Migration and Network Evolution, not Disaster of Combining Disparate Networks:

Both companies were very clear that they are not planning to “smash together two networks”. The companies will focus on migrating MetroPCS customers to T-Mobile’s HSPA+ network, which has sufficient capacity, in order to refarm MetroPCS spectrum, with a target to close the MetroPCS network by the end of 2015. With T-Mobile network upgrades already underway for its LTE launch in 2013, the timing is also good for migrating MetroPCS subscribers to TMO-US LTE as it is launched.

With 60-65% of MetroPCS customers upgrading their handsets each year, the new company will use this rapid upgrade cycle to their benefit to have customer-driven transition. They anticipate heavy users will self-migrate first, freeing up spectrum for refarming faster, and expect some need for incentives in the last 12 months to encourage remaining customers to upgrade, but most of upgrades will be driven by customers.

Of the US $6-7 billion in synergies identified, 5-6 billion will be in the network - decommissioning of redundant sites as refarming occurs is big part of that savings.

Personally, I agree with them calling Neville Ray, CTO of TMO-US, a “rock star” – he has done a lot of work on refarming TMO 1900 spectrum for HSPA+  to target iPhone owners, planning for LTE upgrades with newest technology innovtions, and did a superb job of tackling backhaul upgrades to support 4G RAN evolution.

It will be interesting to see how the combined entity leads network innovation to support new services, as each had key strengths:

  • TMO-US: strengths in refarming and preparing for industry leading LTE migration based on release 10 and using remote radio heads and strong fiber backhaul
  • MetroPCS: network innovation focused on maximizing minimum spectrum with DAS, early use of six sectors per cell site,  and world leading VoLTE launch to migrate voice to LTE to support spectrum refarming

With less urgent need to migrate to VoLTE to move voice to LTE to be able to refarm PCS spectrum (a main driver behind MetroPCS early VoLTE launch), the new company should be able to focus  on how to use VoLTE along with RCS and IMS to create service value propositions,  particularly for SME focus of TMO-US and the high-tier users at MetroPCS—who have been  used to having extra content/services bundled into their unlimited.

Marketing and Target Segments:

For TMO- US, the merger with smaller MetroPCS has several main benefits in terms of market positioning:

  • closes half the gap in subscriber base to number 3 operator Sprint, by going from TMO’s current 33M subs to 42M combined subs for the new company
  • more importantly, should go a long way to support the rebuilding of T-Mobile’s brand equity in the US after its failed merger with AT&T
  • should help to stem some of its customer losses to AYCE offerings
  • prepares it for stronger LTE play
  • positions both companies to continue to drive unlimited as a key differentiator (and target Sprint head-on)

DT and TMO suggest looking at contract, no-contract as a continuum of offerings and highlighted that the new company will have wider range of offerings including SIM-only  for bring-your-own-device and  handset financing plans (see the TMO blog)

For MetroPCS, the merger will stem churn based on users moving outside of their network areas. It will also will extend the value proposition of MetroPCS AYCE plans to more people—a benefit  TMO identified as an “upside” to the merger, stating that probably only 25% of the US has benefitted from MetroPCS plan innovation and they will be able to provide wider distribution.

As a combined company, the ability to position as an aggressive challenger is one of the main competitive benefits of the proposed merger. As company leadership noted, “we haven’t fired all our weapons yet…we will be a very innovative, edgy marketing machine, especially as our [LTE] networks come up.”

Impact on the Industry:

For vendors: Ericsson should be in a relatively good position, as a main vendor to both companies as LTE deployment work continues and as a main vendor behind VoLTE rollout at MetroPCS. NSN could benefit the most, as TMO was its first LTE win in US and it has a strong play with Liquid Net and refarming support.  Most impacted could be microwave vendors, as MetroPCS was playing catch-up with backhaul upgrades and had planned to focus on microwave.

For Other Carriers: Sprint could find itself the most affected, as it has been focusing on its unlimited LTE play. AT&T and Verizon Wireless may find they now have a stronger competitor in the SME and M2M space, particularly as TMO has its HSPA+ network to back up its leading-edge release 10 LTE deployment, and may also find it harder to grow in the prepaid arena. Smaller carriers like Leap’s Cricket service and US Cellular may also find themselves struggling more to retain customers with a stronger value player in town. MVNOs in the US may find they have another network that looks more appealing for wholesale, but could also find it harder to carve out a niche as an AYCE no contract play.

-Susan Welsh de Grimaldo, Director, Mobile Broadband Opportunities

May 14, 2012 17:39 Phil Kendall


The growing availability of LTE smartphones has delivered a significant boost to the technology over the last 6 months and Strategy Analytics has upgraded its forecasts to one billion LTE connections by early 2017. The US, South Korea and Japan are leading the way in 2012, with greater global scale achieved in 2013. By 2017, LTE will generate over one -third of mobile service revenues. Strategy Analytics' report "Worldwide Cellular User Forecast: 2012-2017" provides global forecasts of subscription, technology and revenues, with detail for 82 individual countries.

There will be over 6.6 billion cellular subscriptions worldwide by the end of 2012.

The market continues to slow as a more regions approach levels of saturation. Over 80% of subscriptions added between 2012 and 2017, will come from Asia-Pacific, the Middle East and Africa.  

Cellular subscriptions are outpacing unique users by 48%

Worldwide cellular service revenues will increase by 4% in 2012, a slight decline on the 5% growth witnessed in 2011.

Cellular Subscriptions

(M)                                  2011       2012       2017

W Europe                         556.7      576.0     624.6

CE Europe                        537.6      556.3      583.9

N America                        363.2      386.5      493.2

CL America                      642.3      697.1      841.8

Asia-Pacific                     3019.4    3357.7    4453.4

M East & Africa                 920.3     1026.8    1462.6

Additional questions answered in this forecast include:

How large will the subscription/user gap be in 2013 and 2017?

What share of users and revenue will be from business in 2012? 2017?

How will usage minutes grow from its 2011 level through 2017?

How significant will TD-LTE be in the next five years?

How will users, subscriptions, postpaid vs prepaid, service revenues, churn rates, traffic and ARPU vary across the 82 countries covered?

Client Reading


March 1, 2012 12:25 Phil Kendall

We posted on Monday about some LTE network launches which were announced at MWC, or in the week running up to the show. These were mainly FDD-based network plans. A few more network plans have emerged during the course of the week, with a welcome showing for TDD-based deployments.

Momentum continues to grow for the use of unpaired spectrum for LTE services, with a real mixed bag of countries having commercial networks - Brazil, Japan, Poland and Saudi Arabia are all up and running. In many cases these are examples of operators who do not have sufficient clear paired spectrum to launch FDD-based LTE networks, but own unpaired spectrum. The US will join the commercial TD-LTE market in 2012 with Clearwire's planned deployments, though China and India are the big markets to watch.

At MWC this week we heard from:

  • China Mobile, which plans to have 20,000 TD-LTE base stations in operation on test systems by the end of this year and 200,000 base stations for a commercial service by the end of next year. It's TDD-based 3G services (using TD-SCDMA) have left it isolated globally, so the operator is keen to be one of the early volume players in TD-LTE. The operator also confirmed plans to launch dual-mode FDD/TDD LTE services in Hong Kong following its acquisition of 2.3 GHz spectrum there last month;
  • UK Broadband, which switched on its TD-LTE network in London on Wednesday, with commercial services planned from May. The network uses Huawei kit and operates in the 3.5-3.6 GHz spectrum bands. UKBB holds 124 MHz of spectrum and will ultimately deliver TD-LTE across 6x20 MHz channels, perfectly highlighting that it is not just the "traditional" mobile operators who have cornered the market for usable spectrum;
  • Bharti Airtel, which announced a contract with Nokia Siemens networks to build and manage its TD-LTE network in Maharahstra. The 2.3 GHz network will launch before the end of this year.

An honorable mention should also go to ZTE, who has been highlighting its TD-LTE achievements. It unveiled its multi-mode TD-LTE/WiFi pico base station and ran a live connection to 3 Sweden's dual-mode FDD/TDD LTE network in Stocholm. With a number of chipset vendors showcasing dual-mode LTE chipsets at the show, TD-LTE network opportunities are looking very positive.

February 27, 2012 14:02 Phil Kendall


This year’s Mobile World Congress looks likely to be a useful platform for mobile operators to provide updates on their LTE network deployment plans. There have been a couple of announcements from the show floor so far, though some operators put details out last week to avoid the noise. We are expecting LTE launch plans to emerge throughout the week, but here is a recap of what has come over the last 10 days:

  • Deutsche Telekom confirmed an LTE launch by T-Mobile USA in 2013, following the failed AT&T-TMO merger attempt at the end of last year. It is modernizing 37,000 cell sites in 2012/13 as part of this process and through a combination of spectrum refarming and the spectrum dividend it received from AT&T, it will be able to launch with 20 MHz of LTE spectrum (AWS band) in markets covering half of its current HSPA POPs.
  • eAccess will launch an integrated UMTS/LTE 1.7 GHz network in Japan next month, supplied by Ericsson and Huawei.
  • Everything Everywhere hopes to launch LTE services in the UK by the end of 2012, providing it can get regulatory approval to use its 1800 MHz spectrum. The UK is late to auction 800 MHz and 2.6 GHz spectrum, with UK Broadband also looking to step into the void as it trials TD-LTE at 3.5 GHz.
  • Telefonica unveiled its “live test” LTE network (pdf) covering 5 square km of central Barcelona as part of its domestic LTE build. Using Alcatel-Lucent’s lightRadio technology, the companies are positioning this as the world’s 'smartest' 4G network. The network consists of conventional base stations and smaller metro cells, all operating in the same 2.6 GHz frequency band with no interference. It supports speeds up to 100 Mbps downlink and 40-60 Mbps uplink with the partners suggesting each cell can support 30 simultaneous users at 30 Mbps.
  • Movicel will launch an LTE network in Angola by the end of May 2012. The network, supplied by Huawei, is the first 1800 MHz FDD LTE network in Africa.

Watch this space for an update later in the week on further launch announcements.


January 10, 2012 15:48 Phil Kendall

OnStar outlined the latest fruits of its collaboration with Verizon Wireless at CES this week. It’s showcasing a Chevrolet Volt research vehicle connected via VZW’s 4G LTE network to deliver a range of content and enhanced communications services – information services, streaming of multimedia content, video-calling, etc. VZW has been promoting LTE to the automotive industry as a way to future-proof their connectivity strategy and support tomorrow's high bandwidth use cases, and this message seems to be hitting home.

OnStar 4G LTE Research Vehicle 2012

The collaboration makes sense on a number of levels:

Firstly, LTE in general can offer a robust (and fast) enough connection to deliver these services in combination. Watching a YouTube video on its own is not a problem for many networks, but simultaneous sessions across the front and rear seat (video content and calling, online gaming, browsing, etc.) really do need to look at LTE as the starting point – a must-have rather than a nice-to-have.

Secondly, VZW’s network is built on 700MHz spectrum (as a starting point) so offers good geographical coverage. Mobile broadband networks have generally been about delivering massive capacity into urban environments. I visited Softbank’s new LTE network in Tokyo last week – built in 2.5GHz spectrum the cell sites were 50-200 meters apart in order to saturate the streets with high-speed signals, delivering 40-50Mbps to multiple devices in our demo bus. But that network won't extend beyond city limits and the automotive industry needs a high bandwidth network which can offer much wider coverage - the 700MHz LTE network is the only real option today.

Finally, LTE is a reality today in the US market and is here to stay. The US is significantly ahead of the rest of the world in building mobile broadband networks in the lower spectrum bands offering the coverage the automotive industry requires. VZW’s network now covers more than 200 million people in 190 markets (ok, I know I’ve just said there is more to this than urban coverage) and will cover its entire 3G footprint with 4G by the end of 2013. So the US automotive industry, more than any other, can develop LTE services now which will still be supported come the end of their product lifecycles.

The next challenge for the automotive industry will be data pricing. Bundling a year's service with new vehicles could get very expensive (for the OEM) very quickly with these multimedia applications, so new pricing models will be key. Our own survey work has shown that consumers would prefer a single shared data plan to connect their array of 3G/4G-enabled devices, rather than one plan per device. That is still very much a work in progress in the US market, but a necessary requirement if we are going to see the automotive and CE industries enjoy the full benefits of LTE.