T-Mobile US is creeping closer to a rather rare event in the recent history of the U.S. mobile business, namely a shift in leader market share that has any of the leading providers changing its rank.
Some might argue the switch will happen sometime in 2015, if T-Mobile US maintains its present sales momentum and Sprint cannot ignite faster subscriber growth.
In fact, T-Mobile (including former MetroPCS assets) is now the third largest service provider, in terms of smartphone accounts, if share includes prepaid and postpaid accounts.
And nobody can be sure how market structure could change over the next few years, as Sprint ponders a bid for T-Mobile US, Dish evaluates whether to make its own eventual bid for T-Mobile US, or whether another entity makes an effort to buy T-Mobile.
And then there is the issue of what Comcast or cable might do. Some think Comcast could weigh its own bid for T-Mobile US, though that would be a big break from traditional cable company strategy.
Traditionally, cable operators are loathe to provider services on a non-facilities-based basis, and also prefer to offer services on their existing fixed network.Wi-Fi-first is the present direction, but many speculate a wholesale-supported mobile capability might be added.
That wouldn’t have been unusual for most of the history of the U.S. mobile business, which has been highly fragmented in the past.
But over the decade, the U.S. mobile service provider market has been relatively stable. That wasn’t the case in the three prior decades, when the U.S. mobile market was relatively fragmented.
One result of the recent stability is a market structure similar to most other mobile markets in Europe, where there are four leading providers.
Starting about 2000, the current structure began taking shape, with four leading national providers, including Verizon Wireless, AT&T Mobility, Sprint and T-Mobile US.
The present structure did not take shape until after both Sprint and the precursor of T-Mobile US began operations using new 3G spectrum in the mid-1990s, and after a series of big mergers happened starting around 2000.
SBC, the precursor to today’s AT&T, entered the mobile business in 1987 when it acquired Cellular One, then owned by Metromedia.
In 1988, Pacific Northwest Cellular is founded. It later changes its name to VoiceStream, and then was evenually acquired by Deutsche Telekom.
In 1994, AT&T acquired all of McCaw Cellular and started operating using the AT&T Wireless brand name.
Verizon Wireless was formed in 2000 by Bell Atlantic (now renamed Verizon) and Vodafone, owner of “Airtouch.’
Cingular was formed in 2001 by SBC and BellSouth (BellSouth was later purchased by SBC).
Sprint did not enter the national market in a significant way until after 1995, based on new 2 GHz spectrum allowing it to launch its own mobile service. The same was true for VoiceStream, which was acquired by Deutsche Telekom in 2001.
In 2003, the market share rankings had Verizon at number one, AT&T number two, Sprint the third biggest and T-Mobile US number four, measured by revenues. Rankings of the top two providers can flip if subscribers are the measure of share.
The point is that a U.S. mobile market with an increasingly-stable market share pattern is about to undergo the biggest potential period of change in perhaps a decade.
In fact, some might argue that the U.S. market is unstable not only because of proposed mergers and new entrants, but because the market share structure is itself a bit out of line with what one would expect in almost any competitive market.
A typical expected structure would have the biggest company to have market share about twice that of the number-two provider, while the second-biggest firm has market share about twice that of the number-three supplier.
Generally, that is what one has seen in the Organization for Economic Cooperation and Development countries. In fact, in 1998 the pattern was almost classically perfect. By 2003 the pattern had weakened, with the number-one firm generally losing share, compared to the other two top providers.
Recently, in the U.S. market, the top two providers have had nearly equal share, vastly more than the final two contenders. And even if that raises worries about an eventual stable duopoly, no global mobile market actually has settled into such a pattern. At least, not yet.
|source: Nakil Sung|
U.S. mobile market share before the big consolidation began after 2003 shows the market fragmentation.