Network Speeds Of AT&T And Verizon Being Harmed By Unlimited Data Plans

According to Neville Ray, the chief technology officer of T-Mobile, the reason that the network speeds of AT&T and Verizon have become stifled is because of the reactive decision by the two telecommunication operators to expand their unlimited data offering. In the second quarter results of this year there was a drop in their network speeds and this coincided with the unveiling of new unlimited offerings by the two possibly resulting in the networks getting strained due to a sudden increase in data consumption.

Network speed rankings

This resulted in Verizon falling to third place in network speed rankings after one full quarter of its unlimited data plan. AT&T was ranked second while T-Mobile was ranked first with regards to the download speeds as well as availability of LTE in the United States. According to data provided by Ookla, in this year’s second quarter the average download speeds on T-Mobile’s network was 27 Mbps.

The success of the strategy employed by T-Mobile bears out the fact that smaller firms can outmaneuver their bigger rivals and cause a market disruption.

Subscriber base

Currently in the U.S. market tablet and smartphone adoption is approaching saturation and now carriers are competing for the same user base. The unlimited data offerings from T-Mobile has resulted in a shrinking subscriber base for AT&T and Verizon. In this year’s first quarter 1.1 million customers were added by T-Mobile while its bigger rival, Verizon, lost wireless postpaid customers numbering 307,000.

Prior to launching an unlimited data plan earlier in the year, Verizon had six years ago introduced a similar plan but discontinued it. The reversal of the strategy was mainly because it has been hemorrhaging subscribers. The rate at which it was losing subscribers was reduced a little since in the first quarter of this year it lost postpaid phone customers numbering 289,000 though it could have lost close to 400,000 were it not for the reintroduction of the unlimited data plan offering.

Growth drivers

AT&T and Verizon are not concentrating on just retaining customers, however, and the two telecommunication giants are eyeing new drivers of growth such as video streaming and Internet of Things. The two telecom operators are rolling out LTE Cat-M1 networks all over the world and this will help in the IoT ambitions. Verizon and AT&T have also been on an acquisition spree with the most recent ones being Verizon acquiring some of Yahoo’s web assets and AT&T working on purchasing Time Warner.