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Industry News: September 2015

By: Jesse Cryderman

Verizon tops performance

Mobile network operators make all sorts of claims in their non-stop marketing: fastest network, most reliable network, largest network. Cut through the marketing fog, and what's the truth? The latest report from RootMetrics provides some answers, and it paints Verizon as the clear leader in the US.

First, a little background on methodology. Here's how RootMetrics explains their process:

"To determine which network is leading the performance race in the first half of 2015, we drove over 237,000 miles while testing performance on highways and in big cities, small towns, and rural areas across the US. To put that in perspective, consider that the distance from New York City to Los Angeles is approximately 2,800 miles, the circumference of the earth is 24,901 miles, and the moon is about 239,000 miles away. While collecting samples for this national report, our professional testers could have driven from NYC to LA about 85 times, circled the earth nearly 10 times, or made it all almost all the way to the moon. All told, we collected approximately 6.1 million samples while testing performance during driving, at stationary outdoor locations, and at more than 7,300 indoor locations."

The results? Verizon beat its competitors in 5 of 6 categories, including Overall Performance, Network Reliability, Network Speed, Data Performance, and Call Performance. The only category it did not win was Test Performance, which went to AT&T. 

Overall, the four leading MNOs in the U.S. lined up as follows: Verizon, AT&T, Sprint, and T-Mobile in the rear.T-Mobile lost points for its poor performance outside of metor areas.


Mobile operators compete with freebies

Mobile network operators have subsidized devices for many years, an effective strategy to get the latest phones in the hands of customers with little to no up-front cost. Today, subsidies have been often replaced by monthly installment plans, but the outcome is the same: customers can get their hands on a new iPhone without reaching for their wallets. However, competitive tactics become useless if "everyone is doing it," and such is the case with these device strategies. Most major carriers are offering the new Samsung devices (the Galaxy Note 5 and the Galaxy S6 Edge+) for no upfront cost. So how to differentiate in a field of sameness?

T-Mobile and EE are sweetening their respective deals by offering free digital services to customers who purchase a new Samsung device. In yet another un-carrier move, T-Mobile will give new Galaxy Note 5 and S6 Edge+ customers a free year of Netflix. At roughly $9/month, this is a freebie worth more than $100. It also just might push up the amount of mobile data these customers use, a savvy play by T-Mobs.

EE is taking a similar tactic by offering new Samsung Galaxy S6 Edge+ customers 6 months of unlimited Google Play Music access. This represents a roughly $60 value, and again, will likely drive mobile data usage north.

On the other hand, it may just be a churn reduction play. Both EE and T-Mobile are pitching big bucket deals: 10GB per customer. In place of a contract, a free Netflix subscription might be enough to keep a customer for a year, even if network quality issues arise.


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