US Mobile Market Update 2016

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Highlights of the US Mobile Market 2016

  • The US market went past 400M subscriptions in 2016. Bulk of the net-adds are coming from non-phone devices.
  • The first 100 million connections in the US took 18 years. The last 100 million just 6 years.
  • The overall wireless market grew 18% thanks to the continued explosion on the 4th Wave by new digital players.
  • The 4th Wave ecosystem grew by 60% in revenues.
  • US mobile operator service revenue declined for second year in a row because of intense pricing pressure and slowing growth in the traditional wireless market.
  • Voice revenue continues its double digit decline along with messaging. Access revenue growth has slowed down. Handsets eked out a consolation low single digit growth. Tablets continue to decline while wearables showed growth potential with double digit increase in revenue.
  • For the year, Verizon, Sprint, and AT&T declined in net service revenue. Only T-Mobile showed any positive growth for second year in a row. Verizon suffered the biggest decline second year in a row.
  • Unlimited price war reached its inevitable apex with Verizon buckling under market intensity and offering unlimited. It has been 7 years since all four operators offered unlimited (but limited) data pricing in the US.
  • As we forecasted, Verizon and China Mobile become the first operators in the world to generate $50B in mobile data revenues in a calendar year.
  • Net income increased as operators tightened their belt and both Sprint and T-Mobile had four straight quarters of net positive income.
  • Verizon almost touched $1B in IoT/Telematics revenue. In 2017, it will become the third global operator to pass the $1B mark in the segment.
  • Opex generally climbs up in Q4 and this time it again jumped by a double-digit percentage.
  • Income/sub/mo dropped quite a bit this last quarter. On average, AT&T and Verizon took the bulk of the profits while T-Mobile and Sprint kept their numbers in the positive territory.
  • Compared to 2015, only T-Mobile showed increase in LTV. Rest of the three operators suffered decline in LTV.
  • Overall ARPU continues to decline partly because of the device mix which is now including IoT which tend to be low ARPU albeit highly profitable subscriptions. But, the main reason of the decline is competitive intensity.
  • The mobile data consumption continues to rise. US is third behind Finland and Korea in terms of GB consumed per sub/month and first amongst nations with more 60M population. Given the unlimited availability across all operators, US could surpass Korea in usage this year.
  • The average data consumption in the US was 5GB/mo by the end of 2016. The first 1GB took roughly 210 months. The last one just 4 months.
  • Overall, US is number one in total Zettabytes consumed on mobile networks ahead of second placed China by a distance.
  • Industry capex declined sharply by 18%, the sharpest decline industry has ever experienced in the US. Part of it is because all operators are mostly done with their LTE buildout.
  • T-Mobile accounted for 43% net-adds for the year, most likely the highest by any operator in recent memory.
  • If we look at just the Phone Net-adds, T-Mobile pretty much cleans the table for the year.
  • In Q4, net-adds from IoT+Cars reached the highest they have ever been.
  • By the end of 2016, AT&T had almost 12M cars connected to their network, probably the most by any operator.
  • The overall industry upgrade cycle is over 2.6 years now.
  • Apple captured 77% of the profits in 2016. However, the smartphone segment saw decline in both revenues and profits for the first time.

Other topics covered in the research update:

  • 2017 – Will this be the year for M&A mania?
  • The rise of the Super Operators
  • Estimating 5G data demand
  • Journey to 5GB/mo consumption
  • The Power of Free
  • Unlimited Data – Laws of Economics
  • Future of WiFi
  • 5G Economics
  • 4th Wave Index
  • IoT Revenue Streams and what it means for the ecosystem
  • The shifts in Net-adds
  • Spectrum Auction
  • Regulations for the new age
  • US Wireless Market Q4 2016 Analysis
    • Service Revenues
    • ARPU
    • Subscribers
    • 4th Wave Progress
    • Connected Devices
    • Handsets

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter feeds, future research reports, articles, and our annual thought-leadership summit – Mobile Future Forward. The next US Wireless Data Market update will be released in March 2017.

Disclaimer: Some of the companies mentioned in this update are our clients.

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