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How Apple put the hurt on carriers’ subscriber growth

Apple’s (s AAPL) decision to delay until September the launch of the iPhone 4S put a damper on what is usually a very merry pre-holiday quarter for the U.S. wireless industry. In total, the four nationwide mobile operators roped in 767,000 postpaid subscribers in the third quarter, a 14.5 percent decrease from last year, according to UBS.

In comparison, second quarter net postpaid adds increased 9.2 precent year over year – a quarter where there is traditionally no new iPhone to offer operators a bump, but this year was aided by Verizon’s snagging a CDMA version of the iconic device. The two major iPhone slingers didn’t do badly in the third quarter, but in UBS’ view their net adds were nowhere near the numbers either operator would have achieved if they had new iPhones to offer subscribers.

Verizon Wireless (s VZ) reported 882,000 net postpaid adds, while AT&T (S T) recorded 319,000, with a combined 4.7 million new iPhone activations between them.

That means the fourth quarter could be a bonanza for the wireless industry, combining the usual holiday craziness with the traditional third-quarter new-iPhone bump. UBS predicts a whopping 11.7 million iPhone activations between Verizon, AT&T and Sprint (s S) in the final three months of the year. That will result in 1.3 million total postpaid adds for national operators, up from 1 million in last year’s fourth quarter, UBS projects.

A lot of those customers will go to Verizon and Sprint – as the iPhone newbies – but UBS thinks the big winner will be AT&T. It will have the only “free” iPhone as the 3GS will be entirely subsidized with a two-year contract. UBS also believes that AT&T’s network will actually work for it rather than against it. The iPhone 4S has a 14.4 Mbps high-speed packet access (HSPA) chip tailor-made for AT&T’s network, compared to the slower CDMA EV-DO chips used to access Sprint’s and Verizon’s 3G networks. That may sound a lot of gibberish to the typical consumer, but AT&T merely has to say that its iPhone is faster than the others.

12 Responses to “How Apple put the hurt on carriers’ subscriber growth”

  1. I was on the phone with my friend in Silicon Valley who has an AT&T iPhone, and he had 7 or 8 dropped calls over the course of a couple conversations. Another friend had the Verizon iPhone and we never had any issues. Speed is good, but a working phone is best.

  2. Michael Combs

    AATT may be faster, but in Colorado. ATT has constant dropped calls and data. I would rather be 10% slower that always works than a phone that only works 70% of the time and is guaranteed to drop more than 20 times a week.

  3. This obsession with Subscriber adds (post paid or prepaid) does not take into account that market saturation is close. For every NET new subscriber Carrier the gains there is bound to be a loss from another Carrier. Secondly how does Apple put the “hurt” in? Surely these Carriers do not rely only on Apple…? What were they doing before Apple came along……or yes how quickly we forget, they were just raping the consumers!

    • Petri Ojala

      It depends.

      We are a country of 5.399 million people and the current number of mobile subscriptions is 8.8 million. Less than 10% are prepaid. Between January and June 2011, the carriers added 390,000 subscriptions. During the same time, over 100,000 people got rid of their fixed voice line.

      When the market is operating outside the subvented phones, people get more subscriptions. When the basic monthly cost is just $1 or $2, you’ll have phones around your summer house, boat, etc. When unlimited data is $10 or $20 a month, you may well have a MiFi device around “just in case”.

      It also helps that the carriers are using the same technology. I can buy (for real, not subvented) an unlocked iPhone and switch carrier next week if I don’t like the one I currently have.

      • I’m so confused here. First, what country are you referring to that has only 5.3M people (USA has 300M)? Aside from your comment, I’m also deathly confused by the author’s figures on the amount of iPhones to be sold in Oct, Nov, and Dec.

        If Apple were to only sell 11+ million iPhones during the last three months of the year, then our global economy is in a world of hurt, and it’ll be the lowest amount of phones sold by Apple since 2008. Apple will sell OVER 30 million iPhones (4S, 4, & 3GS) in Oct, Nov, and Dec 2011.

  4. wu, ernie

    The network carrier determines the speed or slow of your smart phone no matter what kind of brand it is, their unique appearance is not so much important. Network carrier is the king of wireless communications, they the one transmit signal, messages and many more of a smart phone.