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Mobile Phone Service - US - February 2012

Cellular networks are headed toward carrying an analogous weight in the 21st century to the role played by trains in the 19th century and the automobile in the 20th century—cellular access is becoming the defining feature of consumer trends ranging from social shopping to mobile video, and in general, cellular networks are the backbone on which societal changes will be based. The financial weight of these services is likewise dramatic. Racing toward $286 billion in sales by 2016, cellular revenue to consumers alone will likely outweigh revenue from new car and truck sales by the end of the decade. Totaling handset sales with hardware and cellular service sales already gives a market larger than the entire new car and truck market.

Yet in spite of its established revenue stream and nearly universal penetration, major players in the industry are having trouble turning a profit, while smaller players are spending fortunes on staid campaigns that pay more heed to industry myths and internal perceptions than the realities of consumer needs and behavior. Further, communication services are perhaps the ultimate widget, being pipelines differentiated solely by price, reliability, and speed. As such, missteps in branding are more critical than in arenas governed more by less definitive distinctions in product offerings.

Mintel’s report aims to keep agencies and carriers in step with the pulse of the market through the examination of the following subjects, among others:

  • Where can growth come from when virtually all adults are already subscribed? Are prepaid plans taking over? How can the family plan evolve?
  • Where does pricing fit in to carrier selection? Which consumers are most important to the industry overall, and to specific brands in particular?
  • How do consumers select their carrier? How do they perceive the leading brands? How are brands marketing themselves? Are brand messages effective, alienating, cluttered, or ignored?
  • Which consumers are most willing to switch carriers, and what type of trade-offs are they willing to accept when selecting between a variety of powerful value propositions?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Market data
            • Consumer data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                        • The market
                          • High revenues, big losses
                            • Figure 1: Fan chart forecast U.S. cellular service revenues, 2006-16
                          • Data drives growth
                            • Figure 2: U.S. cellular segmentation: voice vs. data, at current prices, 2008-16
                          • Rapid growth for prepaid, but postpaid still rules
                            • Income determines carrier, type of plan
                                • Figure 3: Service carrier, by household income, October-November 2011
                              • Verizon soft in minority penetration
                                • Time to decrease focus on handsets
                                  • Market factors
                                    • A more competitive landscape
                                      • Arenas for growth: data, 9-14s, Spanish language Hispanics
                                        • The consumer
                                          • Age, minority status, drive interest in switching
                                            • Figure 4: Service carrier by household income, October-November 2011
                                          • Mass confusion about plans, 4G, persists across income groups
                                            • Prepping for the 4G revolution
                                              • Younger ages like it unlimited
                                                • Smartphones and data plans safe sells for most ages
                                                  • Family plans planned by whole family
                                                    • What we think
                                                    • Insights and Opportunities

                                                      • Support for Android
                                                        • Getting back into apps, games, and video
                                                          • The video opp
                                                            • Competing with fixed-point internet
                                                              • Mobile commerce
                                                              • Inspire Insights

                                                                  • Inspire trend: Prove It
                                                                    • Inspire trend: Who are the Joneses?
                                                                    • Market Size and Forecast

                                                                      • Key points
                                                                        • Bushels of cash, limited profits
                                                                            • Figure 5: U.S. total sales of cellular services, at current prices, 2006-16
                                                                            • Figure 6: U.S. total sales of cellular services, at inflation-adjusted prices, 2006-16
                                                                          • Fan chart forecast
                                                                              • Figure 7: Fan chart forecast U.S. cellphone service revenues, 2006-16
                                                                          • Market Drivers

                                                                              • Key points
                                                                                • Universal penetration limits voice growth
                                                                                  • Figure 8: Cellphone penetration, 2005-11
                                                                                • Family plans: generating subs and reducing churn, but lowering ARPU
                                                                                  • Figure 9: Family vs. individual plan, 2005-11
                                                                                  • Figure 10: Family vs. individual plans among teens, 2008-11
                                                                                • Average spend still rising, but at slower rates
                                                                                  • Figure 11: Last month’s cellphone bill, 2005-11
                                                                                  • Figure 12: Services/plans subscribed, 2008-11
                                                                                  • Figure 13: Attitudes toward traditional uses of cellphones, 2008-11
                                                                                • GPS, apps, and tethering
                                                                                  • Figure 14: Phone and phone service features, by age, October-November 2011
                                                                                • Smartphone features drive data plans
                                                                                  • Figure 15: Smartphone features used in last 30 days, by age, October-November 2011
                                                                                • Smartphone and tablet penetration
                                                                                  • Figure 16: Smartphone and tablet access, December 2011
                                                                              • Segment Performance

                                                                                • Key points
                                                                                  • Voice vs. data
                                                                                    • Figure 17: U.S. cellular services segmentation: voice vs. data, at current prices, 2009-11
                                                                                  • Prepaid vs. postpaid
                                                                                    • Figure 18: U.S. cellular services segmentation: prepaid vs. postpaid, at current prices, 2009-11
                                                                                  • Voice tapped out
                                                                                    • Figure 19: U.S. total sales of cellular voice services, at current prices, 2006-16
                                                                                  • Dramatic gains await in data
                                                                                    • Figure 20: U.S. total sales of cellular data services, at current prices, 2006-16
                                                                                  • Prepaid gaining steam
                                                                                    • Figure 21: U.S. total sales of cellular prepaid services, at current prices, 2007-16
                                                                                  • Postpaid to continue strong performance
                                                                                    • Figure 22: U.S. total sales of cellular postpaid services, at current prices, 2007-16
                                                                                • Innovations and Innovators

                                                                                  • Mobile wireless by the byte
                                                                                    • Google Wallet
                                                                                    • Leading Companies

                                                                                      • Key points
                                                                                        • AT&T and Verizon pulling ahead
                                                                                          • Figure 23: Cellphone carrier subscribed to, 2007-11
                                                                                        • Role of household income in carrier selection
                                                                                          • Figure 24: Cellphone service carrier, by household income, October-November 2011
                                                                                        • Retail distribution
                                                                                          • Familiarity central driver of brand perception
                                                                                            • Figure 25: Cellphone service provider brand qualities, October-November 2011
                                                                                            • Figure 26: Cellphone service provider brand qualities (2), October-November 2011
                                                                                        • Marketing Strategies

                                                                                          • Key points
                                                                                            • Marketers focus on the past when using handsets as stand-ins for branding
                                                                                              • Online media
                                                                                                • Facebook
                                                                                                  • Twitter
                                                                                                    • Television ads
                                                                                                      • AT&T and Verizon thrust and parry with iPhone
                                                                                                        • Figure 27: AT&T ad “The Summoner”, December 2011
                                                                                                        • Figure 28: Verizon ad “Jacques saves day”, November 2011
                                                                                                      • Sprint on point with all you can eat
                                                                                                        • Figure 29: Sprint ad “Don’t worry”, November 2011
                                                                                                      • T-Mobile pushes 4G alternatives to iPhone
                                                                                                        • Figure 30: T-Mobile ad “Perfect gift ($29.99)”, November 2011
                                                                                                      • MetroPCS
                                                                                                        • Figure 31: MetroPCS ad “We have lift off”, November 2011
                                                                                                      • US Cellular
                                                                                                        • Figure 32: US Cellular ad “Not doing it”, November 2011
                                                                                                    • Phone and Plan Ownership

                                                                                                      • Key points
                                                                                                        • Targeting seniors and the low-income
                                                                                                          • Figure 33: Smartphone and feature phone penetration. by age, October-November 2011
                                                                                                          • Figure 34: Smartphone and feature phone penetration, by household income, October-November 2011
                                                                                                        • Growing the teen and kid market
                                                                                                          • Figure 35: Cellphone penetration among teens, 2006-11
                                                                                                          • Figure 36: Cellphone penetration among teens, by gender and age, April 2010-June 2011
                                                                                                          • Figure 37: Cellphone penetration among kids, 2008-11
                                                                                                          • Figure 38: Cellphones penetration among kids, April 2010-June 2011
                                                                                                          • Figure 39: Family plan extending beyond the home, October 2010-June 2011
                                                                                                          • Figure 40: Family vs. individual vs. business plan, October 2010-June 2011
                                                                                                        • Voice
                                                                                                          • Figure 41: Type of cellphone service plan, by gender, October-November 2011
                                                                                                          • Figure 42: Type of cellphone service plan, by age, October-November 2011
                                                                                                          • Figure 43: Type of cellphone service plan subscribed to, by household income, October-November 2011
                                                                                                        • Mass confusion over plans
                                                                                                          • Figure 44: Confusion over cellphone plans, by age, October 2010-June 2011
                                                                                                          • Figure 45: Confusion over cellphone plans, by household income, October 2010-June 2011
                                                                                                        • Text and data
                                                                                                          • Figure 46: Cellphone services/plans subscribed, voice and data by type of plan, by age, October 2010-June 2011
                                                                                                          • Figure 47: Cellphone data plans, limited vs. unlimited, by age, October-November 2011
                                                                                                          • Figure 48: Cellphone services/plans subscribed, voice and data by type of plan, by household income, October 2010-June 2011
                                                                                                          • Figure 49: Cellphone data plans, limited vs. unlimited, by household income, October-November 2011
                                                                                                          • Figure 50: Cellphone data plans, limited vs. unlimited, by presence and number of children in household, October-November 2011
                                                                                                        • Bundling and service selection
                                                                                                          • Figure 51: Cellphone bundling and service selection, by age, October-November 2011
                                                                                                      • Carrier Selection

                                                                                                        • Key points
                                                                                                          • Quality beats cost
                                                                                                            • Figure 52: Factors in cellphone carrier selection, October-November 2011
                                                                                                            • Figure 53: Very important factors in cellphone carrier selection, by age, October-November 2011
                                                                                                          • Moving beyond price-based marketing
                                                                                                            • Figure 54: Very important factors in cellphone carrier selection, by household income, October-November 2011
                                                                                                          • Coverage and customer service more important than handsets
                                                                                                              • Figure 55: Willingness to change phone vs. carrier, coverage, and customer service, by age, October-November 2011
                                                                                                            • 18-54s most likely to be planning a switch
                                                                                                              • Figure 56: Intent to switch cellphone carrier, by age, October-November 2011
                                                                                                              • Figure 57: Average cellphone bill, by age, October 2010-June 2011
                                                                                                          • Beyond Voice and Text: Attitudes and Usage

                                                                                                            • Key points
                                                                                                              • The cellular divide beyond voice and text
                                                                                                                  • Figure 58: Attitudes and opinions about cellphones, by age, October 2010-June 2011
                                                                                                                  • Figure 59: Attitudes toward cellphone service, by household income, October 2010-June 2011
                                                                                                                • Attitudes toward 4G
                                                                                                                  • Figure 60: Attitudes toward wireless mobile broadband and 4G service, by age, October-November 2011
                                                                                                                • Role of income in tenure and spend
                                                                                                                  • Figure 61: Length of service with current provider, by household income, October 2010-June 2011
                                                                                                                • Role of income in average spend
                                                                                                                  • Figure 62: Last month’s cellphone bill, by household income, October 2010-June 2011
                                                                                                              • Custom Consumer

                                                                                                                  • Key points
                                                                                                                    • Prepaid not working for families
                                                                                                                      • Figure 63: Family plan usage by contract vs. no-contract plans, October-November 2011
                                                                                                                    • Family plan users more current in technology
                                                                                                                      • Figure 64: Phone and phone service features, among family plan users, October-November 2011
                                                                                                                    • Multiple decision makers in family plan selection
                                                                                                                      • Figure 65: Cellphone plan selection among family plan users, October-November 2011
                                                                                                                  • Impact of Race and Hispanic Origin

                                                                                                                    • Key points
                                                                                                                      • Second and third tier more successful with minority groups
                                                                                                                          • Figure 66: Cellphone carrier subscribed to, by race/Hispanic origin, October 2010-June 2011
                                                                                                                        • Subscription gains still to be made among Spanish-language speakers
                                                                                                                          • Figure 67: Cellphone penetration, by language spoken in home, October 2010-June 2011
                                                                                                                          • Figure 68: Cellphone carrier subscribed to among Hispanics, by language spoken in home, October 2010-June 2011
                                                                                                                        • Minorities more active in switching carriers
                                                                                                                          • Figure 69: Intent to switch cellphone carrier, by race/Hispanic origin, October-November 2011
                                                                                                                      • Appendix: Additional Consumer Tables

                                                                                                                          • Responses by number of children in the household
                                                                                                                            • Figure 70: Intent to switch cellphone carrier, by presence and number of children in household, October-November 2011
                                                                                                                            • Figure 71: Average monthly cellphone bill, by presence of children in household, October 2010-June 2011
                                                                                                                            • Figure 72: Type of cellphone service plan subscribed to, by presence and number of children in household, October-November 2011
                                                                                                                            • Figure 73: Attitudes toward wireless mobile broadband and 4G service, by presence and number of children in household, October-November 2011
                                                                                                                            • Figure 74: Phone and phone service features, by presence and number of children in household, October-November 2011
                                                                                                                          • Feature usage
                                                                                                                            • Figure 75: Smartphone features used in the last 30 days, by gender, October-November 2011
                                                                                                                            • Figure 76: Smartphone features used in last 30 days, by household income, October-November 2011
                                                                                                                          • Responses by age
                                                                                                                            • Figure 77: Cellphone carrier subscribed to, by age, October 2010-June 2011
                                                                                                                          • Responses by gender
                                                                                                                            • Figure 78: Intent to switch cellphone carrier by gender, October-November 2011
                                                                                                                            • Figure 79: Attitudes toward wireless mobile broadband and 4G service, by gender, October-November 2011
                                                                                                                          • Responses by race/Hispanic origin
                                                                                                                            • Figure 80: Most important factors in carrier selection by race/Hispanic origin, October-November 2011
                                                                                                                            • Figure 81: Last month’s cellphone bill, by race/Hispanic origin, October 2010-June 2011
                                                                                                                            • Figure 82: Services/plans subscribed, by race/Hispanic origin, October 2010-June 2011
                                                                                                                            • Figure 83: Type of cellphone service plan subscribed to, by race/Hispanic origin, October-November 2011
                                                                                                                            • Figure 84: Willingness to change phone vs. carrier, coverage, and customer service by race/Hispanic origin, October-November 2011
                                                                                                                            • Figure 85: Attitudes toward wireless mobile broadband and 4G service, by race/Hispanic origin, October-November 2011
                                                                                                                            • Figure 86: Phone and phone service features, by race/Hispanic origin, October-November 2011
                                                                                                                          • Responses by household income
                                                                                                                            • Figure 87: Phone and phone service features, by household income, October-November 2011
                                                                                                                            • Figure 88: Attitudes toward wireless mobile broadband and 4g service, by household income, October-November 2011
                                                                                                                        • Appendix: Trade Associations

                                                                                                                          Companies Covered

                                                                                                                          • ALLTEL Corporation
                                                                                                                          • AT&T Inc.
                                                                                                                          • CDMA Development Group (CDG)
                                                                                                                          • Cellular Telecommunications and Internet Association (CTIA)
                                                                                                                          • Cingular Wireless LLC
                                                                                                                          • Comcast Corporation
                                                                                                                          • Craigslist
                                                                                                                          • Enterprise Wireless Alliance (EWA)
                                                                                                                          • Global Wireless Education Consortium (GWEC)
                                                                                                                          • MetroPCS Communications, Inc.
                                                                                                                          • RadioShack Corporation
                                                                                                                          • Rural Cellular Association (RCA)
                                                                                                                          • Sprint Nextel Corporation
                                                                                                                          • T-Mobile USA
                                                                                                                          • Telecommunications Industry Association (TIA)
                                                                                                                          • Verizon Wireless (Cellco)
                                                                                                                          • Virgin Mobile Usa Llc

                                                                                                                          Mobile Phone Service - US - February 2012

                                                                                                                          £2,684.63 (Excl.Tax)