While the United States' Big Four carriers — Verizon, AT&T, T-Mobile, and Sprint — dominate the wireless market, other players can gain a foothold by targeting niche audiences. The Big Four carriers served 98.6% of the US wireless market, either directly or through mobile virtual network operator (MVNOs), through 2018, according to The Wall Street Journal.
Here's how two challengers in the US wireless market are trying to use new network-based services to lure — or at least retain — customers in this crowded space:
- US Cellular intends to launch 5G in Iowa and Wisconsin in the first quarter of 2020. The service will cover hundreds of communities across the two states, which represent two of the largest markets for US Cellular, according to Fierce Wireless. Several of the target cities — including Oshkosh, Wisconsin, and Waterloo, Iowa — have fewer than 100,000 inhabitants. To serve these regions with relatively low population density, US Cellular has been moving radios higher up on towers so they can cover a broader area. The company will also deploy 5G using low-band 600 MHz spectrum, which suits low population density regions in particular. By comparison, Verizon and AT&T have used mmWave spectrum in their 5G deployments, which focus on larger US cities such as Atlanta, Chicago, Phoenix, and New York. With the Big Four working from larger to smaller markets for 5G deployments, US Cellular identified this opportunity to be a first-mover for 5G in Wisconsin and Iowa. Though it lost net subscribers in Q2 2019, the company saw an increase in revenue driven by higher revenue per user. 5G could further squeeze value out of these high-revenue users, upselling them from existing plans.
- US cable company Charter is testing a wireless network that uses CBRS band spectrum. The wireless offering would use dual-SIM smartphones to switch between Verizon's macro cellular network and its own network of CBRS-powered small cells, according toLight Reading. Charter could reduce costs by expanding reliance on the CBRS network and therefore reducing reliance on Verizon's cellular network — Charter's MVNO service Spectrum Mobile paysVerizon an estimated $3.09 per gigabyte. If successful, Charter could offer a low-cost service as a bundle to its existing base of home internet subscribers. In 2018, Charter had 23.6 million home internet subscribers in the US, putting it only behind Comcast's 25.1 million subscribers.
The Big Four (or perhaps soon, the Big Three) are unlikely to cede significant ground to these challengers due to their economies of scale. With massive capital expenditures, the Big Four are able to offer nationwide coverage and improve network speeds over time. Smaller players do not have the same access to capital, which would be required to create comparable networks.
Without this scale, they must resort to buying access to coverage from the Big Four, which creates an inherent cost disadvantage. Still, fresh strategies such as those discussed above can carve out a nook for smaller-scale revenue opportunities.