Research and Markets: United States Telecommunications Report Q4 2010

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United States Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the United States' telecommunications industry.

As in previous quarters, some operators made minor revisions to their historical data, which we at BMI have incorporated into our forecasts, along with recently released data from Q210. Our forecasts for mobile data have been modified slightly upwards following strong US mobile subscription additions for the first half of the year, while the number of fixed lines is decreasing at a slightly quicker rate than anticipated. Broadband usage forecasts have been adjusted slightly downwards. In all cases, the adjustments have been fairly small. Recent developments have re-emphasised the importance of data services to mobile operators, with particular interest in the next generation in network technology.

Verizon Wireless intends to reach 100mn Americans with its LTE coverage by the end of 2010, announcing at a recent communications conference that 30 NFL cities (cities with NFL franchises) would be connected to the 4G technology by the end of 2010. AT&T plans on launching its own commercial LTE network by mid-2011, a significant acceleration of its previous launch plans. Meanwhile, both operators along with T-Mobile USA, have been enhancing and augmenting their 3G networks with software-based upgrades, meaning that faster data processing and transmission speeds have been rolled out very quickly and with no disruptions to the networks. T-Mobile USA, though, scored something of a goal by touting its HSPA upgrade (to HSPA+) as a 4G offering. Telecoms analysts and smartphone/mobile computing users were quick to play down those claims. T-Mobile has not commented publicly on plans to launch LTE. MetroPCS, a small player in the market, launched its own 4G wireless network, along with an LTE-enabled handset manufactured by Samsung. The companys first-mover advantage in its LTE network, LTE handset, and competitive pricing (voice, text, and mobile internet for US$55 per month) should not be underestimated. The extent to which the companys size will constrain its potential, however, remains to be seen.

Sprint Nextel was able to reverse a long-term trend of losing subscribers with significant increases in wholesale and prepaid customers, due to newly acquired MVNO Virgin Mobile and Common Cents Mobile, a flat-rate prepaid service available in about 700 Walmart stores. Higher-ARPU postpaid subscribers continue to decline. However, the postpaid quarterly churn rate was below 2% for the first time in five years. Sprint remains committed to its WiMAX-based 4G network, which has expanded to more markets. Sprints handsets have been popular, scoring a surprise hit with its EVO WiMAX handset, even against the backdrop of Apple/AT&Ts unveiling of a fourth generation iPhone. More recently, Sprint's dual 3G/4G phone, the Samsung Epic 4G, were launched in early September with one of the best first-day sales of any Sprint device.

Sprints WiMAX partner, Clearwire, intimated that it would be interested in migrating to LTE once its exclusivity with WiMAX developer Intel comes to an end. Were Sprint to replace its WiMAX plant with LTE, this could be a costly move; instead, it is possible that a Sprint/Clearwire LTE platform would operate alongside WiMAX. Nevertheless, the WiMAX business posted a strong 94% y-o-y increase in customers in Q110.

Broadband take-up continues to grow robustly, although our forecasts have been reined in slightly. The growth has been led by the larger fixed-line telecoms operators and the multiservice cable operators. There were 77.9mn broadband subscribers by the end of 2009, a figure that grew to more than 79.5mn by June 2010. AT&T and Comcast continue battling to lead the market, and Comcast overtook AT&T in Q309. The gap has consistently widened in the nine months that have followed. We now expect there will be 98.0mn total broadband subscribers in the US by 2014, with a penetration rate of more than 30%.