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Mobile Service Providers - US - March 2014

“Brands are becoming increasingly savvy in making adjustments in pricing that favor their ARPU, but as subscribers themselves become increasingly sophisticated, these shifts will eventually become transparent to them. It may be time for marketers to primarily focus on growing new services that benefit consumers, rather than tinkering further with plans.”

– Billy Hulkower, Senior Analyst, Technology and Media

Some questions answered in this report include:

  • How can the industry grow past universal penetration?
  • Has the future been prepaid?

With mobile phone penetration approaching universality, the only ways for service providers to grow is by poaching customers from other carriers, or by increasing ARPU (Average Revenue Per User). In response to this need, this report addresses how to hone messaging and promote data consumption. The report analyzes how subscribers view their current provider, and whether they are willing to switch carriers. Subjects of focus include use of cellular service for laptops and tablets, attitudes to mobile internet, providers under consideration for future use, and reasons for wanting to switch carriers, with an eye toward how subscribers can be won over from competitors.

Mintel defines this market to include payments to telecommunications carriers for wireless-service subscriptions. Mobile voice and data communication among adults aged 18+ is the focus of the report. This report builds on the analysis presented in Mintel’s Mobile Phone Service – US, February 2013. Mintel covers the mobile phone hardware, mobile advertising, mobile apps, mobile gaming, and tablets in their own dedicated reports:

  • Tablets – US, July 2013
  • Mobile Apps – US, September 2013
  • Mobile Phones – US, February 2013
  • Mobile Advertising – US, May 2013
  • Mobile Gaming – US, October 2013

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Table of contents

  1. Scope and Themes

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

                        • The market
                          • Slow growth driven by data
                            • Figure 1: Total US sales and fan chart forecast of cellular service revenue, at current prices, 2008-18
                          • Prepaid gains, but remains a niche
                            • Figure 2: US cellular service revenue, postpaid vs prepaid, 2013
                          • Smartphone-centered lifestyles drive mobile data growth
                            • Figure 3: Features used on cell phone in past 30 days, January 2011-September 2013
                          • Data growth competes with faster speed, lower-cost fixed-point
                            • Connected devices waiting for carriers to pick up
                              • Key players
                                • Figure 4: Cellular carrier, January-September 2013
                              • T-Mobile’s pricing revolution
                                • Network wars dominate airwaves
                                  • The consumer
                                    • Growth in highest-income group perk for pricy plans
                                      • Figure 5: Spend on monthly cell/wireless phone bill, by household income, January-September 2013
                                    • Younger subscribers more likely to switch
                                      • Figure 6: Interest in switching carriers, and switched to new service in past 12 months, by age, December 2013
                                    • Switchers seek cost-relief
                                      • Figure 7: Reasons for switching carriers, December 2013
                                    • What we think
                                    • Issues and Insights

                                        • How can the industry grow past universal penetration?
                                          • The issues
                                            • The implications
                                              • Has the future been prepaid?
                                                • The issues
                                                  • The implications
                                                  • Trend Application

                                                      • Trend: Guiding Choice
                                                        • Trend: Who are the Joneses?
                                                          • Mintel futures: Human
                                                          • Market Size and Forecast

                                                            • Key points
                                                              • New competitive landscape dampened growth in 2013
                                                                • Increased data use to offset lower connection fees
                                                                  • Sales and forecast
                                                                    • Figure 8: Total US sales and forecast of cellular service revenue, at current prices, 2008-18
                                                                    • Figure 9: Total US sales and forecast of cellular service revenue, at inflation-adjusted prices, 2008-18
                                                                    • Figure 10: US cellular subscriptions, 2008-13
                                                                  • Fan chart forecast
                                                                      • Figure 11: Fan Chart and Forecast: Total US sales of cellular service revenue, at current prices, 2008-18
                                                                  • Market Drivers

                                                                    • Key points
                                                                      • Smartphone ownership
                                                                        • Figure 12: Smartphone ownership, by age, December 2013
                                                                      • Tablets and laptops relatively untapped market
                                                                        • Figure 13: Ownership of smartphones, tablets, and laptops, December 2013
                                                                        • Figure 14: Use of laptops and tablets with cellular plans, December 2013
                                                                      • Rapid shifts in phone use
                                                                        • Figure 15: Features used on cell phone in past 30 days, January 2011-September 2013
                                                                      • Age and spend
                                                                        • Figure 16: Spend on monthly cell/wireless phone bill, by age, January 2013-September 2013
                                                                        • Figure 17: US population by age, 2014-19
                                                                      • Income and spending
                                                                        • Figure 18: Spend on monthly cell/wireless phone bill, by household income, January-September 2013
                                                                        • Figure 19: Household income distribution, 2011-13
                                                                    • Competitive Context

                                                                      • Key points
                                                                        • Home internet major competitor for mobile data
                                                                          • Speed
                                                                            • Price
                                                                              • WiFi hotspots reduce spend on mobile data
                                                                                • Municipal WiFi limited threat, but hotspots at retail are spreading
                                                                                  • Home ISPs enhance WiFi coverage
                                                                                  • Segment Performance

                                                                                    • Key points
                                                                                      • Prepaid continues to gain, but more slowly
                                                                                        • Figure 20: US cellular service revenues, postpaid vs. prepaid, 2008-18
                                                                                      • Postpaid rallies on data use and connected devices
                                                                                        • Figure 21: US cellular service postpaid subscriptions, 2008-13
                                                                                      • Prepaid gains revenue share but not subscription share
                                                                                        • Figure 22: US cellular service prepaid subscriptions, 2008-13
                                                                                    • Leading Carriers

                                                                                      • Key points
                                                                                        • Stasis
                                                                                          • Figure 23: Current carrier, January 2008-September 2013
                                                                                          • Figure 24: Current carrier, by household income, January-September 2013
                                                                                          • Figure 25: Current carrier, by type of plan, December 2013
                                                                                          • Figure 26: Current carrier, by recent change in service, December 2013
                                                                                        • Top tier even more dominant in total connections
                                                                                          • Figure 27: Retail connections, by carrier, December 2012-December 2013
                                                                                      • Innovations and Innovators

                                                                                        • Key points
                                                                                          • The “Uncarrier” shakes up plan design
                                                                                            • Sprint charts its own course with Framily pricing
                                                                                              • New upgrade options lure customers with the very latest devices
                                                                                                • Carriers want to pay your termination fees
                                                                                                  • Sponsored content opens up supply-side revenue stream
                                                                                                    • Internet-connected autos represent ongoing opportunity
                                                                                                    • Marketing Strategies

                                                                                                      • Overview of the brand landscape
                                                                                                        • T-Mobile doubles down on support for Un-carrier initiatives
                                                                                                          • Figure 28: T-Mobile TV ad, “No Contract”, 2014
                                                                                                          • Figure 29: T-Mobile TV ad, “Pipes”, 2014
                                                                                                          • Figure 30: AT&T TV ad, “CatchJeremy.com, Day 3”, 2013
                                                                                                        • AT&T’s kids continue to win fans
                                                                                                          • Figure 31: AT&T TV ad, “It’s Not Complicated – Pet Turkey,” 2013
                                                                                                          • Figure 32: AT&T TV ad, “Hours,” 2014
                                                                                                        • Verizon: “It’s the network, stupid”
                                                                                                          • Figure 33: Verizon Wireless TV ad, “Map Gallery,” 2013
                                                                                                          • Figure 34: Verizon Wireless TV ad, “48 Hours,” 2013
                                                                                                        • Sprint focuses on people
                                                                                                          • Figure 35: Sprint TV ad, “Framily Plan: Band,” 2013
                                                                                                        • Value carriers downplay differences, emphasize price
                                                                                                          • Cricket and Straight Talk suggest all mobile service is the same
                                                                                                            • Figure 36: Cricket Wireless TV ad, “Half is More,” 2013
                                                                                                          • Virgin Mobile declares National Breakup Day
                                                                                                          • Attitudes to Plans and Service

                                                                                                            • Key points
                                                                                                              • Confusion reigns
                                                                                                                • Figure 37: Finding cell phone plans confusing, by age, January-September 2013
                                                                                                              • Few prefer contract plans
                                                                                                                • Figure 38: Attitudes to cell phone plans, by age, December 2013
                                                                                                              • Attitudes to internet service
                                                                                                                • Figure 39: Attitudes to internet service, by age, December 2013
                                                                                                                • Figure 40: Attitudes to internet service, by plans to change service, December 2013
                                                                                                              • Limited interest in docking stations
                                                                                                                • Figure 41: Preference for landline use, by age, January 2013-September 2013
                                                                                                                • Figure 42: Interest in docking stations, by age, December 2013
                                                                                                              • Near-term switchers see value in docks
                                                                                                                • Figure 43: Interest in docking stations, by plans to change service, December 2013
                                                                                                              • Prepaid vs postpaid
                                                                                                                • Figure 44: Type of plan: Prepaid vs contract, by household income, December 2013
                                                                                                              • Two thirds on group plans
                                                                                                                • Figure 45: Type of plan: family vs individual, by age, January 2013-September 2013
                                                                                                                • Figure 46: Type of plan: family vs individual, by household income, January 2013-September 2013
                                                                                                              • Use of laptops with mobile plans
                                                                                                                • Figure 47: Use of laptops with cellular plans, by age, December 2013
                                                                                                              • Use of tablets with mobile plans
                                                                                                                • Figure 48: Use of tablets with cellular plans, by age, December 2013
                                                                                                            • Incidence and Interest in Switching

                                                                                                              • Key points
                                                                                                                • Sticking with the plan
                                                                                                                  • Figure 49: Relationship between quality of service and interest in switching, by age, January-September 2013
                                                                                                                • Younger adults switch more frequently
                                                                                                                  • Figure 50: Switched to new service in past 12 months, by age, December 2013
                                                                                                                  • Figure 51: Tenure at current carrier, by age, January-September 2013
                                                                                                                  • Figure 52: Interest in changing carriers, by age, December 2013
                                                                                                                  • Figure 53: Tenure at current carrier, by household income, January-September 2013
                                                                                                                • Prepaid subscribers like exiting
                                                                                                                  • Figure 54: Switched to new service in past 12 months, by type of plan, December 2013
                                                                                                                  • Figure 55: Interest in changing carriers, by type of plan, December 2013
                                                                                                                • Changers ready to move again
                                                                                                                  • Figure 56: Interest in changing carriers, by recent change in service, December 2013
                                                                                                                • 18-44s more confident about carrier selection
                                                                                                                  • Figure 57: Carriers under consideration for future use, by age, December 2013
                                                                                                              • Reasons for Switching

                                                                                                                • Key points
                                                                                                                  • Price top reason for switching
                                                                                                                    • Figure 58: Reasons for switching carriers, by age, December 2013
                                                                                                                    • Figure 59: Reasons for switching carriers, by type of plan, November 2013
                                                                                                                  • Sentiments related to loyalty
                                                                                                                    • Figure 60: Reasons for not switching carriers, by age, December 2013
                                                                                                                  • Near-term switchers seek customer support
                                                                                                                    • Figure 61: Reasons for switching carriers, by plans to change service, December 2013
                                                                                                                • Plans, Attitudes and Switching Sentiment by Carrier

                                                                                                                  • Key points
                                                                                                                    • Verizon and TracFone customers happiest with service
                                                                                                                      • Figure 62: Interest in changing carriers, by carrier, December 2013
                                                                                                                      • Figure 63: Reasons to not switch carriers, by carrier, December 2013
                                                                                                                    • Speed still an issue for Sprint
                                                                                                                      • Figure 64: Attitudes to cellular internet service, by carrier, December 2013
                                                                                                                    • Tier one subscribers seek cost-relief, tier two better reception
                                                                                                                      • Figure 65: Type of plan: Prepaid vs contract, by carrier, December 2013
                                                                                                                      • Figure 66: Reasons for switching carriers, by carrier, December 2013
                                                                                                                  • Race and Hispanic Origin

                                                                                                                    • Key points
                                                                                                                      • Overview
                                                                                                                        • Second and third tier more successful with multicultural groups
                                                                                                                          • Figure 67: Cellular carrier subscribed to, by race and Hispanic origin, January-September 2013
                                                                                                                          • Figure 68: Type of plan: family vs individual, by race and Hispanic origin, January-September 2013
                                                                                                                          • Figure 69: Switched to new service in past 12 months, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 70: Tenure (years) at current carrier, by race and Hispanic origin, January-September 2013
                                                                                                                          • Figure 71: Spend on monthly bill, by race and Hispanic origin, January-September 2013
                                                                                                                      • Appendix – Other Useful Consumer Tables

                                                                                                                        • Responses by age
                                                                                                                          • Figure 72: Current carrier, by age, January-September 2013
                                                                                                                          • Figure 73: Current carrier in online survey, by age, December 2013
                                                                                                                          • Figure 74: Type of plan: Prepaid vs contract, by age, December 2013
                                                                                                                        • Responses by household income
                                                                                                                          • Figure 75: Current carrier in online survey, by household income, December 2013
                                                                                                                          • Figure 76: Family plan use across multiple households, by household income, January-September 2013
                                                                                                                          • Figure 77: Interest in changing carriers, by household income, December 2013
                                                                                                                          • Figure 78: Attitudes to cell phone plans, by household income, December 2013
                                                                                                                          • Figure 79: Interest in docking stations, by household income, December 2013
                                                                                                                          • Figure 80: Attitudes to internet service, by household income, December 2013
                                                                                                                          • Figure 81: Switched to new service in past 12 months, by household income, December 2013
                                                                                                                          • Figure 82: Reasons for not switching, by household income, December 2013
                                                                                                                          • Figure 83: Use of laptops with cellular plans, by household income, December 2013
                                                                                                                          • Figure 84: Attitudes to cell phone service, by household income, January-September 2013
                                                                                                                          • Figure 85: Carriers under consideration for future use, by household income, December 2013
                                                                                                                        • Responses by race/Hispanic origin
                                                                                                                          • Figure 86: Cell phone ownership, by race and Hispanic origin, January-September 2013
                                                                                                                          • Figure 87: Tenure (years) at current carrier, by race and Hispanic origin, January-September 2013
                                                                                                                          • Figure 88: Carriers under consideration for future use, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 89: Attitudes to plans, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 90: Type of plan: Prepaid vs contract, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 91: Attitudes to cell phone plans, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 92: Reasons for not switching, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 93: Reasons for switching carriers, by race/Hispanic origin, November 2013
                                                                                                                          • Figure 94: Use of laptops with cellular plans, by race/Hispanic origin, December 2013
                                                                                                                          • Figure 95: Family plan use across multiple households, by race and Hispanic origin, January 2013-September 2013
                                                                                                                        • Responses by carrier
                                                                                                                          • Figure 96: Attitudes to cell phone plans, by carrier, December 2013
                                                                                                                          • Figure 97: Switched to new service in past 12 months, by carrier, December 2013
                                                                                                                          • Figure 98: Use of laptops with cellular plans, by carrier, December 2013
                                                                                                                        • Responses by type of plan
                                                                                                                          • Figure 99: Attitudes to internet service, by type of plan, December 2013
                                                                                                                          • Figure 100: Reasons for not switching, by type of plan, December 2013
                                                                                                                          • Figure 101: Carriers under consideration for future use, by type of plan, December 2013
                                                                                                                          • Figure 102: Use of tablets with cellular plans, by type of plan, December 2013
                                                                                                                        • Responses by intent to change service
                                                                                                                          • Figure 103: Attitudes to cell phone plans, by plans to change service, December 2013
                                                                                                                          • Figure 104: Use of laptops with cellular plans, by plans to change service, December 2013
                                                                                                                          • Figure 105: Use of tablets with cellular plans, by plans to change service, December 2013
                                                                                                                          • Figure 106: Type of plan: Prepaid vs contract, by plans to change service, December 2013
                                                                                                                          • Figure 107: Current carrier, by plans to change service, December 2013
                                                                                                                          • Figure 108: Reasons for not switching, by plans to change service, December 2013
                                                                                                                      • Appendix – Trade Associations

                                                                                                                        Companies Covered

                                                                                                                        • AT&T Inc.
                                                                                                                        • Comcast Corporation
                                                                                                                        • MetroPCS Communications, Inc.
                                                                                                                        • T-Mobile USA
                                                                                                                        • Verizon Communications Inc.
                                                                                                                        • Verizon Wireless (Cellco)

                                                                                                                        Mobile Service Providers - US - March 2014

                                                                                                                        US $3,995.00 (Excl.Tax)