US Mobile Market Update 2018

5G Industry Transition – We have worked on every single G transition and as we move into the 5G cycle, we continue to stay heavily engaged with players across the ecosystem and around the globe from very advanced markets to just emerging. Chetan Sharma Consulting is involved in several 5G strategic projects across three continents, across the value chain, so, have a front row seat into what’s coming. We have penned 9 research papers on 5G already, many of them industry firsts, and have several in the works for the coming months and years based on what we are learning from our work on the ground.

Highlights of the US Mobile Market Q4 2018 and 2018

US Wireless Industry Milestones for 2018

  • The overall US Wireless Ecosystem is worth over $1 trillion now becoming the first nation to cross this massive milestone.
  • AT&T crossed 25 Million connected cars on its network, the first operator to do so.
  • AT&T became the first US operator to cross the 150 million subscriptions milestone.
  • The mobile data consumption in China and India is growing so fast that both of them surpassed US, which was the data consumption leader to-date. US stands third now behind the two Asian giants.
  • Emerging devices started as a small group inside AT&T in 2008. Now there are over 100M connected devices in the US. AT&T has led the market each quarter since its inception.
  • Connected tablets had a torrid year in 2018 with each quarter seeing negative growth. Thus, for the first time, connected tablets were a net negative for the industry and might not recover from this trend.
  • Connected wearables had their best year to date and is making up for the declines in the connected tablet market. Connected Apple Watch has been the sleeper hit of 2018.
  • Almost 80% of the netadds came from the non-phone devices in 2018, making it the highest percentage share in history.
  • AT&T and Verizon appear in the top 5 mobile operators who exceeded 1 Exabyte/month in data traffic in 2018.
  • The subscriber base of T-Mobile+Sprint went past Verizon Wireless. If the merger were to be approved, the new entity is likely to become the number two operator in the country behind AT&T.

Other Industry Highlights for 2018

  • Perhaps the biggest story out of 2018 was that the industry is growing back again after three straight years of service revenue declines. The services revenues grew modestly in 2018 to reverse the declining and ominous trend.
  • After suffering the decline last year, Postpaid revenues also ticked up in 2018.
  • T-Mobile-Sprint merger is making its way through the regulatory approval process. (see more discussion below).
  • Thanks to device sales, overall revenues increased by 3.3%.
  • Verizon and AT&T launched their versions of 5G and kicked off the competitive frenzy that will go into 2019
  • The 5G discussions are getting louder and more substantive with each passing day. However, it is the first “G” transition when net-revenues is under pressure, so it presents a unique set of issues to the industry. (more 5G commentary below)
  • Postpaid ARPU declined for the year. However, because of the influx of non-phone devices into the mix, overall ARPU was down 1% YoY.
  • AT&T added the most number of connections to their network however they almost entirely came due to connected devices.
  • T-Mobile added two-thirds of industry’s postpaid subs.
  • AT&T also added the most number of connected cars for the year in the history of the industry. Its total tally stands at almost 29M connected vehicles. AT&T is now adding more than 2M cars to its network per quarter.
  • Smartphone penetration stood at 95%.
  • The quarter continued to see the decline in tablets indicating waning interest from consumers in the segment. In aggregate, operators haven’t added a new tablet sub in the last 9 quarters. This might have implications to the 5G strategy for OEMs.
  • While the operators struggled to maintain growth, the overall wireless market is growing rapidly thanks to the continued explosion on the 4th Wave by new digital players.
  • Verizon’s IoT/Telematics business grew 8% but the growth seems to have slowed down a bit.
  • Net Income was flat. Income/sub/mo gained as operators have tightened their belts and have improved their profitability despite pressure on revenues. All operators improved their profitability.
  • Industry capex is expected to grow slower than expected in 2019 though a lot will depend on the competitive dynamics in 1H19 and operators may yet boost their spend beyond the current guidance. Infrastructure vendors are benefiting from the current 5G cycle.
  • The overall industry upgrade cycle is over 3 years now.
  • In the race to a trillion, as we predicted, Apple became the first company to cross the milestone. Amazon, Microsoft, and Google also reported excellent earnings. Amazon is likely to be the first one to the $2 Trillion landmark barring the impact of potential regulations.
  • The average data consumption in the US touched 9 GB/mo by the end of 2018.

Other topics covered in the research update:

  • Dawn of the 5G Era. What should we expect in 2019?
  • 4th Wave drives the US market to a trillion dollars
  • 5G Maturity Model: Is 5G a race?
  • Mobile Edge Computing – An Opportunity Assessment Framework
  • The Connected Devices Journey to 100M
  • The rise of smartwatches and the decline of cellular tablets
  • 5G and the Industry Verticals
  • Revenue models for 5G
  • 5G – Known Knowns and Known Unknowns
  • Will T-Mobile/Sprint merger go through?
  • 5G Marketing and Positioning
  • Huawei gets caught in the geo-political crossfire
  • Mobile Data Growth: What’s Next?
  • MAGAF’s dominance
  • The shifts in Net-adds
  • What to expect in the coming months?
  • US Wireless Market 2018 Analysis
    • Service Revenues
    • ARPU
    • Subscribers
    • 4th Wave Progress
    • Connected Devices
    • Handsets

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