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If AT&T Is So Bad, Why Is It Beating Verizon Every Quarter?

Oct 22, ’10 4:58 PM
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CHART OF THE DAY: If AT&T Is So Bad, Why Is It Beating Verizon Every Quarter?.

AT&T just signed up 2.63 times more subs in Q3. They’ve been adding more subs every quarter since Q1 09.

Another point is that both are adding subs. So who is losing?

  • ericgen

    Many are postulating that the simple answer is the iPhone. We'll have a better idea how true this is if the iPhone comes to Verizon next year. People are also suggesting that the large size of the last gap is due to the Verizon iPhone rumors. If it happens, it'll be interesting to see how well Verizon's network actually holds up to the iPhone data onslaught. It would be pretty humorous if the Verizon iPhone turned out to make ATT look better!

  • Joe_Winfield_IL

    It's worth noting that the iPhone is the only unique device in the US market. In the linked article, Frommer asks,
    "What, all those Verizon Droids aren't pulling in millions of new subscribers from AT&T, Sprint, and T-Mobile?". The problem is that AT&T, Sprint, and T-Mobile also all have Android devices. The "Droid" device family's brand equity isn't strong enough to make the exclusivity with Verizon a big deal. All 4 carriers also have Blackberry, so device exclusivity isn't worth much there either.

    • asymco

      I just noticed this: http://blog.tweetdeck.com/android-ecosystem This is just like Windows Mobile of old except fragmentation was less!

      • TomCF

        Right now I haven't really seen developers scream about Android fragmentation. But manufacturers haven't had a whole lot of time to *really* mess up…errr…customize their Android versions. There's fragmentation, but it seems mostly in name right now. We'll see if there comes a point where there's fragmentation in function as well.

        Unless some relevant applications start breaking, or their developers start having real QA issues, then the fragmentation is not an issue. History says it will be. Some say it won't.

        I have popcorn ready to watch the show.

      • Rob scott

        It looks like Google will try to stem the "Android fragmentation problem" with the next release of Android. I am sure they wouldn’t try to fix the platform if it wasn’t broken.

        Fragmentation affects users as well, and I think you can find user complaints if you Google hard enough.

      • When Chrome OS comes to tablets and other mobile devices next year Google's mobile strategy will be even more fragmented.

  • Rob scott

    So Verizon throws hundreds of millions of dollars in marketing Android and they have nothing to show for it. Someone should get fired.

    Verizon needs the iPhone more than Apple needs Verizon.

    Android is about to lose market share… Is Horace's Q4 iPhone sales estimate (~16 million) to soon become the new quarterly average for the iPhone?

    • EricE

      "Verizon needs the iPhone more than Apple needs Verizon. "

      I've been pointing this out since last year. Each year that goes by and AT&T grows more than Verizon, the weaker Verizon's position is. If the iPhone is indeed coming to Verizon in January, it's because they finally caved to Apple and not the other way around.

  • 2sk21

    So I have been an AT&T customer for the past two years and (an iPhone 4 customer for the past two months). I have always had excellent service and mind you I live in the NY metropolitan area – northern NJ and Westchester county north of NY City. Given all the complaints I hear about AT&T on the blogs

  • OpenMind

    Android, a nerd phone made by nerd for nerd. Look at this link: http://lifehacker.com/5668980/what-should-i-do-wh…. Do Android actually expect users to know this? It is so Unix nerd.

    • Marcos El Malo

      Oh, come on! Even my grandma can root an android phone, and she's very technophobic and very dead. XD

    • J Ives

      I did it. Amazingly frustrating to run out of space coming from iOS and w/ 32GB card to boot.
      Your point is valid. Were I not pissed and motivated to geek out, would not be able to run all apps.

  • kevin

    All the US carriers lose subscribers, but Sprint has been the carrier that has consistently had a net loss of subscribers, though it stopped the bleeding for CDMA last quarter. AT&T/Verizon/T-Mobile have gained many more subscribers than what Sprint has lost, so the net gains are a combinaton of new cellphone users, users adding second accounts, and users leaving other carriers. In the US, cellular has not yet reached 100% penetration.

    One other point: An important carrier metric is postpaid churn – which is a reasonable measure of how many contract (usually 2-year) subscribers are leaving. (The metric is a bit seasonal.) Beginning in 1Q07, through 1Q10, AT&T postpaid churn went from 1.5 to 1.07, while Verizon went from 0.89 to 1.07. (Both Sprint and T-Mobile are 2+.) I would attribute most of this gap-closing to iPhone, with most of the gap-closing occurring in 2007 and 2008. In fact, during these last two quarters, Verizon has re-established a gap of .07-.08, which I would attribute, along with much slower gap-closing in 2009, to the "success" of Android-based handsets in satisfying those who prefer not to leave Verizon.

    • Rob scott

      Churn is a very tricky measure. Be careful not to attribute the reduction or increase in churn to just one or two factors, as many factors drive churn. As a matter of fact postpaid churn at Verizon has gone up from 0.91% in 2007 to 1.09% in 2009. Did Android drive churn up?

      It also looks like Verizon has historically had the lowest churn of all the carriers. So, a relative low churn at Verizon is not a new thing.

      • kevin

        On a quarterly basis (which is more illuminating than an annual basis), 4Q08 to 3Q09 was the worst period for Verizon retail postpaid churn, as churn increased by 10-20% yoy for each quarter. That was pre-Droid, and I think those who were apt to leave for a good smartphone (or iPhone) were leaving. The comparable 2010 1Q-3Q numbers have been consistently better for Verizon, and I think it's because Verizon subscribers who wanted smartphones had Droids as a decently good choice.

        If iPhone had come to Verizon in 1Q 2010, I'd tend to believe that Verizon caved. But Droid has been successful in stemming the outflow during 2010. So at this point, if iPhone goes to Verizon in 1Q 2011, I'd say Apple must've given up something as well, though I don't know what. We'll have to wait til early next year to see what might've happened in the negotiations.

        Verizon also reports that 23% of its 82m postpaid subscriber base has smartphones, which is about 19m. AT&T, though, says 33.5m of its 67.7m postpaid subscribers have 3G smartphones. So relatively speaking, Verizon is far from saturated, and that's the huge opportunity ahead for iPhone.

        Looking back, AT&T has mostly squandered the opportunity iPhone gave them. They didn't expand their network capacity fast enough, and caused either poor performance or artificial limitations on many of the best iPhone capabilities. They could've done much more to delight their iPhone subscribers, and build in good will for the long-term. Now they're counting on business plans and family plans to keep subscribers from leaving; "trapping" behavior that is just like the old days. If Verizon allows iPhone Facetime over cellular from day one, AT&T is in for the year of hurt.

      • Morbid

        Very interesting… Your numbers make a lot sense and will be an advantage for Verizon. I do beleive that Verizon had a major blunder by not carrying the iPhone. I think the reason was not to share their profit with Apple.
        I think Verizon needs the iPhone and Apple needs Verizon. Both companies will benefit from this but we have to wait and see if it happens.

  • John

    As 2sk21 points out, ATT service is nit as bad as the pundits think. Certainly there are holes in the coverage, but in many areas it is quite good.

    Verizon likes to promote their map showing broader coverage than ATT. I’ll guess that ATT’s smaller coverage still covers 95% of the population. ATT is the fastest network (PC World) and it let’s you talk and use the net at the same time. You can put someone on the speaker and talk to them while using the map, sending a photo or using Safari.

    There must be enough users around who are saying it works fine to alleviate the fears of potential new users.

  • timnash

    Another important metric is Average Revenue Per User. AT&T's has been trending up since the iPhone launched and Verizon's trending down. So Verizon has been funding its LTE network from customers who pay less. It has also held on to them with 'two for one' offers which hit margins.

    If Verizon hadn't bought another carrier Alltel, a couple of years ago, AT&T would now have the largest subscriber network.

  • Jeffi

    if-att-is-so-bad-why-is-it-beating-verizon-every-quarter?

    Horace, its really a simple answer… It's the iPhone exclusivity. I have two family plans with nine iPhone 4's. The service is awful and getting worse. I travel frequently and view this as a nationwide problem. Why do I stay… Because the iPhone is that good. Will I leave? If the the device is superior to AT&T's? Of course!

    • Jeffi

      I meant to say if the Verizon service (not device) is superior to AT&T that I would switch. In a heart beat!

  • Iphoned

    @Rob Scott

    Re google android fragmentation.

    Here is another view. Google doesn’t care about fragmentation. In fact it could all be part of the plan. Use oems to sell. Then, at the right time step in with their own “true” Android phone leaving OEM partners high and dry. This will solve fragmentation in one fell swoop.

    Think about that.

  • Sergio

    Probably this is going to change when,next year, Att&T looses the I-phone exclusive and Verizon starts selling it".

  • Shrike

    Google doesn’t care about fragmentation that much because they sell search and display advertising space.

    There’s only one type of fragmentation that they really care about: carriers and operators that replace Google services with competing services such as Bing. The fragmentation with multiple OS variants, different UIs, different resolutions and screen sizes, Google doesn’t care all that much about. Sucks for developers, but as long as Google services are in there, they still win.

    Windows Phone 7 devices will be much more worrisome to Google than Apple iOS. Google gets zero money from them.

    Eventually, someone will figure out how much ad space money they get for being on Apple iOS and compare it to Android money. That’ll be a very interesting comparison.

    • >>Windows Phone 7 devices will be much more worrisome to Google than Apple iOS. Google gets zero money from them.

      Amen. A credible OEM offering targeting same OEMs, coupled with the legal action against IP infringements against those same OEMs is a very serious threat to Android.

      This will be a fun year to watch….

      Meanwhile Apple is sitting pretty with 50%+ growth, $51b in the bank and a PE of 14

  • Interesting situation for Google. Now it is becoming more clear (at least to me, probably was clear to many others earlier) why they really did Android. I guess they had no choice. Without Android they faced prospects of being completely shut out of search/ads by device providers. But even with Android, their mobile search and ads will likely be limited to just Android. I can imagine that eventually Apple, Nokia, Rim, and Microsoft, and HP which will collectively dominate smart phone share will lock Google out of mobile search/ads. And clearly even on Android, some operators will remove Google services, almost certainly in China they will.

    It is funny how Google hides true Android intention under the "Open" slogan.