How Much Demand for Fixed Line Voice Actually Exists?

Some issues never seem to fully be resolved. Whether consumers “prefer” a la carte or bundled services is such a question.

How much demand there really is for some services is another related question.

Service providers sometimes argue that consumers “want one bill” rather than three or four bills. It is argued that consumers want bundles of shows and channels.

And it is clear that consumers prefer to save money, which is the primary attraction of triple play bundles.

But many services are not sold unbundled. “Naked digital subscriber line ” is one such product in many countries. DSL cannot be purchased without a tied purchase of a fixed phone line. Such product tying is an old practice, and often provides consumer value.

In other cases, the “headline price” differential between a bundled “DSL plus voice line” is significant.

A triple play package generally costs much less than all three services purchased separately, at least for an introductory period.

Some consumers would prefer to buy all of their communication services one by one (a la carte), with no bundling. But discounts matter. Prices matter. So many consumers buy a triple play package because it actually is cheaper than buying two services they really want.

Competition, in many markets, for high speed Internet access and TV subscription services means that bundle deals of three services often are comparable in price to two services at full price.

If the price of the bundle is within $5 to $10 per month of the cost of two services at full price, then even some consumer advocates might recommend purchase of the triple play bundle, especially if the third service is home phone service.

In fact, current promotional offers in the U.S. market, especially when an account can be switched from a competitor, often provide lower prices for a triple play service than a dual play, at least for a year or two.

But that does raise another question. If in fact many consumers are buying triple plays to save money, how much demand actually exists for each of the products?

Many surveys suggest the highest demand of all is for fixed network high speed access. In fact, demand might rival or beat mobile service.

Video entertainment also is purchased by more than 80 percent of U.S. households, while fixed network voice subscriptions have been falling since 2000.

So one wonders how strong the remaining demand is for voice, and might eventually be for the more-expensive video subscription packages, if the assumption is that high speed access is the number one priority for nearly all consumers, along with their mobile service.

To put the matter sharply, were purchase of a fixed network voice line not a requirement for getting high speed access, demand for voice lines would be lower.

Were the price of a triple play service not so affordable, compared to buying just two services, far fewer phone lines would be sold.

The point is that we do not actually know how much demand there really is for fixed network phone service.

One way of assessing demand is to look at what happens in recessions, where consumers have to make harder choices about what to buy.

In recessions, for example, overall revenue falls, as consumers spend less.

The impact of the Great Recession beginning in 2008 is easy enough to describe. According to TeleGeography Research, revenue growth slipped from about seven percent annually to one percent in 2009, returning to about three percent globally in 2011.

But that is “growth rate,” not absolute growth. According to some studies, U.S. consumer spending on communications actually grew, overall, in the wake of the Great Recession. One might hypothesize this is because of the adoption of mobility services, sold to people, not places.

Looking at spending on phones, which grew about 17 percent from 2007 to 2010, one might argue mobile devices drove the increase, for example.

One might also argue that high speed access had become so important, and faster access relatively more important, causing consumers to spend more in that category. But mobility is probably the driver for the revenue growth.

That would be in line with findings that consumption and consumer spending fell virtually across the board in the Great Recession.  

But that might mask some important indicators of value. Some surveys found that device purchases slowed during the Great Recession. Some surveys found less willingness to cut high speed access than other services.

In fact, some surveys found consumers would rather abandon their mobile service than give up fixed high speed access. If they had to give up one service  (video entertainment, mobile, broadband), U.K. consumers would ditch video (49 percent) or mobile (30 percent) before their fixed network broadband connection (two percent), a survey of  more than 10,000 U.K. consumers found, for example.

Consumers have indicated the would give up other products as well to keep their broadband access.

The point is that high speed access arguably is highly resilient in a recession, and arguably the most-valued service, perhaps even be more valued than mobility. But mobility likely would rank as among the next most important service.

By some studies, consumer spending on mobile devices increased during the Great Recession of 2008 and spending also increased for communication services. That pattern hasn’t changed.

But most consumers simply found other ways to economize during the last recession, scaling back premium services for video, for example.

It does not seem that there was much recession impact on subscription video entertainment spending, though some consumers might have dropped a premium channel in favor of expanded basic service.

When does the Internet "Disappear"

Truly ubiquitous technologies and networks are invisible. Think of electricity in a developed country, compared to electricity availability in a developing country. Think of wastewater systems, drinking water systems or road networks and refueling stations.

The point is that when a technology or network truly becomes ubiquitous, it is simply taken for granted, and is not something any human being needs to think about before doing anything that assumes the existence of the infrastructure.

Wi-Fi once was anything but ubiquitous. Today it is approaching, but is not at, the ubiquitous stage, as most people, when out and about, still cannot be sure they have such access, where they presently are.

So consider the statement that “the internet will disappear,” as Eric Schmidt, Google chairman, recently said at the World Economic Forum, speaking about the impact of the Internet of Things.

“There will be so many IP addresses; so many devices, sensors, things that you are wearing, things that you are interacting with that you won’t even sense it,” Schmidt argued. “It will be part of your presence all the time.”

That is a functional example of true ubiquity. Between likely fifth generation mobile network capabilities (seamless device access to all available networks), increasing Wi-Fi density, small cells, broad interconnection, roaming and authentication agreements and apps, increased ability to use spectrum effectively, business models for sensing functions and Moore’s Law, the IoT and untethered access is going to be much closer to such ubiquity, in many markets and regions.

Ubiquity and "invisibility" are directly related. Indeed, ubiquity "causes" invisibility. The triumph of the Internet will be that it is taken for granted.

WAN Industry Now Touches Addressable Market 6 Times Bigger

Global Cloud XChange CEO Bill Barney argues that the wide area networking industry "now is the computer bus." What he means is that data now moves between peripherals and processors and storage over the wide area network, as cloud computing becomes the new paradigm for computing.

Where one might have argued that the addressable market for WAN transport providers was perhaps $232 billion in 2012, the addressable market now is much bigger. In fact, Barney argues, the addressable market is six times larger.

That includes involvement in the $600 billion "software" business, as most software now is delivered or used "in the cloud."

The market also touches the $965 billion enterprise "information technology" business and the $103 billion data center business as well.

That doesn't necessarily mean WAN transport and services will displace most of the revenue in the extended ecosystem, only that WAN providers now play more central roles in those other areas, and for that reason will be generating additional revenue within the ecosystem.

When Barney talks about a new "golden age of fiber," that is the sense in which he means it.

Connected Car is Probably the Best Vertical for Incremental Mobile Connections

The coming Internet of Things both illustrates the financial upside for many participants and the potential issues for Internet service providers. IoT, most assume, will eventually be very big.

In the 1990s, one billion people connected to the Internet with desktop computers and laptops. In the first decade of the 21st century, two billion people connected to the Internet with mobile phones.

By 2015, according to Cisco Systems, 25 billion things will be connected to the Internet, and to each other. Perhaps five years after that, in 2020, the number of connected things might double to 50 billion.

The issue is whether IoT also will produce big revenue opportunities for ISPs. Much depends on how the things get connected. If every automobile represents at $10 a month incremental mobile subscription, a sizable revenue stream could be generated.

If most of those cars connect using consumers’ existing smartphones, maybe less incremental revenue is generated. Other IoT devices might connect primarily using unlicensed spectrum, though, generating no direct incremental revenue.

In-home IoT sensors likely will use Wi-Fi. Other connected things might rely on Bluetooth or other short-range connection methods that likewise do not generate direct incremental revenue for an ISP or mobile service provider.

Of the enabling developments, one potentially worrisome issue for Internet service providers is that IoT will hinge on “cheap bandwidth” and “cheap sensors,” as well as ubiquitous Wi-Fi coverage usable “for free or at very low cost.”

Sensor prices have dropped more than 100 percent over the past decade, to an average of 60 cents. Processing costs have declined by nearly 60 times over the past 10 years.

The cost of bandwidth has declined by a factor of nearly 40 times over the past 10 years. That, in conjunction with affordable sensors, makes IoT feasible. But “cheap bandwidth” also suggests low connectivity revenue for ISPs and mobile service providers.

But big data is a directly intertwined opportunity as the IoT will generate huge amounts of unstructured data.

Automobile connectivity is one industry vertical where mobile networks should be the mainstay, however.

By some estimates, by 2018, half of all cars sold will have Long Term Evolution, 3G or Wi-Fi capability.  Audi Connect is one such program.

Audi is offering the first-ever in-vehicle 4G LTE data connection in North America. The data plans will be competitively priced, starting at $99 for a six-month plan and $499 for a 30-month plan.

The six-month plan comes with 5 Gigabytes of data usage. The 30-month plan supplies 30 GB.

AT&T has at least eight connected-car contracts, with Nissan (Leaf), BMW, Ford Motor Co., General Motors (OnStar), Tesla, Audi (A3 and Q3), Volvo and GM's operations in Europe.

Verizon’s Hughes Telematics acquisition in 2012 gave the telco an established vehicle information technology business, which in 2011 produced $71 million worth of revenue and a contract with Mercedes Benz.

AT&T has identified services for the connected car as including advanced diagnostics, family tracking, enhanced safe driving via telematics, ability to remotely warm, find one’s car in a parking lot or open locked doors, voice recognition for hands-free driving, automotive app stores, vehicle updates of firmware, rear seat entertainment and connected media.

Mobile Networks Generate 80% of All Internet Traffic

With access to unlicensed spectrum, mobile networks probably would collapse. 

Globally, about 80 percent of all Internet data is generated by the mobile network, says Robert Pepper, Cisco VP.

Wi-Fi offload is about 66 percent of all mobile data consumption, and will reach 71 percent within about five years.

Mobile service providers might still prefer to operate their businesses using licensed spectrum, but unlicensed spectrum now is necessary, since the mobile network likely could not easily support all the traffic people already use.

When AT&T introduced the Apple iPhone in June 2007, almost no AT&T customers used a smartphone, so AT&T had no firm idea of the impact adoption would have on its network.

By the the end of the first quarter of 2012, 59 percent, or 41.2 million, of AT&T's postpaid subscribers had smartphones, lifting AT&T mobile data traffic 20,000 percent in five years.

In fact, AT&T mobile data volume has doubled every year since 2007. “It’s been a challenging year for us,” said John Donovan, AT&T CTO, said in 2009.

“Overnight we’re seeing a radical shift in how people are using their phones,” Donovan said. “There’s just no parallel for the demand.”

In many cases, iPhone users were consuming an order of magnitude more data than users of other smartphones and 24 times more data than feature phone customers.

Nigerian Mobile Retailer Loans Minutes of Use

Sustainable business models are a challenge for mobile and Internet service providers in South Asia, Southeast Asia and Africa where many would-be customers are hard to reach and cannot afford to pay too much for service.

As with products such as laundry detergent, mobile minutes of use are sold in bite-sized quantities. 

Mobile usage typically is sold on a prepaid basis. So customers limit use when their prepaid cards approach the limit. That will tend to reduce consumption.

But Channel IT, a Nigerian mobile operator, allows customers to borrow about $1 in airtime when their prepaid cards approach spending limits. 

Customers pay back $1.10, even if the loan is only for a day. That increases usage dramatically.

The default rate is less than one percent, since customers aren't allowed back on the network until they've repaid the loan.

That is the type of retail pricing innovation other mobile service providers might think about, as the program apparently generates about $2.4 million in annual revenue for Channel IT.

How Much Market Share Will AT&T Mobility and Verizon Wireless Lose?

It isn’t yet clear how much market share Verizon Wireless and AT&T Mobility are willing to lose to Sprint, T-Mobile US and other contestants, undoubtedly including Google, in the near future.

Verizon and AT&T already say the customers they are losing to Sprint and T-Mobile US are the “least attractive,” financially, and there likely is much truth in such statements.

Offers based on price--which is how T-Mobile US and Sprint are attacking the market, are likely to be most attractive to price-conscious customers.

Verizon historically positions at the “premium” end of the market, and often is willing to lose customers rather than compete vigorously on price.

For that reason, some believe Verizon could lose 10 percent market share to other fixed network providers of gigabit Internet access services, unless Verizon decides to compete at the “gigabit for $70 to $100” price-value point. Some think Verizon will not do so.

But some also believe Google Fiber will keep the pressure on the other major ISPs with less investment than some might have predicted.

Instead, some think mobile and wireless now is the new focus. By some estimates, about 10 percent of U.S. consumers buy service from a mobile virtual network operator, as Google will be.

So is it reasonable to think Google, all the rest of the MVNOs, Sprint and T-Mobile US might be able to take up to 10 percent additional share from AT&T and Verizon?

It’s hard to say, as it also is possible Sprint, T-Mobile US and Google might take share from the other MVNOs as much as from AT&T and Verizon.

Maybe five percent from each service provider is a more reasonable expectation of potential AT&T or Verizon share loss.

The point is that AT&T and Verizon, while moving to protect the core of their customer bases, are not going to try and protect 100 percent. Some attrition at Verizon and AT&T therefore is going to happen.

How Will Mobile Operators Respond to Elon Musk, Google, Richard Branson, Greg Wyler Satellite Efforts?

With the potential launches of two brand-new satellite networks to deliver Internet access to unserved populations across three continents, mobile service providers in developing regions are going to have to make hard decisions about their own strategies.

The reason: mobile networks now are the primary way most people in developing markets use the Internet, and get their access. But there remain billions that cannot buy the service because they are not reached by the networks.

Facebook and Google, among others, have been thinking, and now are acting, to provide such access by new satellite networks that presumably will offer far-lower retail prices than have been possible in the past.

Elon Musk will be part of a new battle between global satellite fleets intended to bring Internet access to underserved people around the globe. SpaceX, Musk’s satellite firm, just got $1 billion from Google to help build a new satellite fleet.

Just days ago, Musk talked about a new project aimed at putting up to 4,000 satellites into low Earth orbit to provide low-cost Internet access. The satellite system could start providing data services by 2020, though the full constellation could be in place by 2030, possibly. The cost of the venture could amount to $10 billion or more, Musk said.

Separately, WorldVu Satellites Ltd. has raised funding from Virgin Group and Qualcomm for a proposed global satellite internet company focusing on potential users in developing countries that cannot be reached by fixed or mobile networks, as well as to supply Internet access to flying aircraft.

The potential launch of two new huge fleets of satellites essentially will force mobile service providers to choose between accelerating building of networks to areas that have been deemed non-economic, or risk losing all that subscriber growth to satellite providers.

U.K. Mobile Market: Four to Three at the Top

Four and three are the key numbers for contestants and regulators in many markets, but particularly in Europe, where the numbers describe the leading mobile service providers in a market.

In the highly-competitive U.K. mobile market, the key number will drop from four to three as a result of Telefónica’s sale of its U.K. mobile operation to Hutchison Whampoa, previously the smallest of the four leading service providers.

Not often does any single provider jump from last to first in market share, in any industry.  

Hutchison’s acquisition of the Telefónica subsidiary O2 UK for £10.25 billion in cash will vault smallest mobile operator with 7.5 million customers to the largest with 31.5 million customers.

At the same time, the BT acquisition of EE will give Hutchison and BT market share of about 38 percent each.

Vodafone would drop to third place with 24 percent market share.

The conventional wisdom is that reduction of the number of leading providers from four to three would allow all the firms to firm up profit margins and reduce the amount of ruinous competition. That of course raises concerns about whether there will be enough competition to restrain predatory behavior.

Some would argue pressure from application providers is the new restraint. Google, for example, sees lower prices for Internet access, mobile services and devices as helpful inputs to its own business, and Google will not stop putting into place operations that help drive such cost reductions.

Google will emerge in precisely that role in the U.S. mobile market soon.

Windows 10 Makes Voice a Feature of the Operating System

Windows 10 unifies end user experience across devices (PC, tablet, phone), but also illustrates a trend long underway, namely voice communications that are a feature of an application, rather than a discrete service.

In Windows 10, Skype comes built in as a communications suite. In other words, Skype will be directly built into messaging, calling and video experiences, with no need to download an app.

That obviously has implications for telcos and cable TV companies that sell public network voice communications and messaging. Perhaps the biggest effect is a decline in usage of traditional long distance calling services, even if, globally, long distance calling volume continues to grow.

Some amount of volume growth, and some amount of profit margin, have been lost to over the top voice and messaging services, however tough it might be quantify.

And voice as a feature of widely-used apps--and now even operating systems--points to some longer-term strategic issues for telcos selling retail services to end users.

The way telcos and cable TV companies have combated declines in volume and profit margin for their core legacy services (voice and entertainment video) is to shift to the “bundle of services” (voice, video entertainment, high speed access) as the core offer.

To get the best prices, consumers buy all three products, even if actual demand for each constituent product varies. Over time, however, the perceived value of two of the core components--voice and entertainment video--is going to be challenged even further.

That doesn’t necessarily mean customers will stop buying, only that fewer will do so. Consider for example take rates for legacy voice, text messaging or linear video subscriptions. Some might argue there is a zero-sum dynamic at work.

If consumers want more on-demand access to video, on all devices, at lower prices, then OTT video has to displace linear video. That ripples back through the ecosystem.

Some might point out, for example, that if linear video demand dwindles, then satellite services built on point-to-multipoint architectures are dangerously exposed, since that architecture is ill suited to on-demand services.

But demand can be shaped by retail packaging. Assume many consumers face a situation where the services they really want to pay for amount to $80 a month (linear, Netflix, HBO, Amazon Prime and other streaming services).

Assume distributors decide they want to keep offering linear services, but also make on-demand streaming access available at modest incremental prices. In such cases, at least some consumers will conclude--as they do for triple play offers--that buying the bundle costs less than purchasing each discrete service on a stand alone basis.

In that case, linear demand might not fall as much as one might predict. And, in fact, demand for linear distribution architectures (satellite, for example) might last far longer than otherwise would seem to be the case.

For the same reason, bundling public network voice, messaging and other services props up demand for services that might otherwise fare worse. That might be the good news for today’s distributors.

The bad news is that profit margins are likely to keep falling, as greater inducements will be needed to entice consumers to keep buying services they otherwise might decide to abandon. Some consumers, for example, buy triple play services including fixed network voice even if they don’t use the phone line.

The point is that, long term, the triple play bundle, today’s fundamental strategy, will come under increasing margin pressure. On the other hand, the bundle could be shaped in ways that prolong the value of the bundle, overall, beyond an expected product life cycle that is mature and declining.   

What Happens to "Triple Play" Strategy when Voice and Linear Video Both Have Dwinded?

As foundational as the “triple play” bundle of voice, linear video entertainment and high speed access now is in the U.S. consumer telecom services market, it is bound to change as over the top subscriptions gain traction.

If that seems an unremarkable statement, consider that AT&T CEO Randall Stephenson--presently working to acquire DirecTV--also says says it is “inevitable” that the traditional bundle of cable television channels will crumble as more content travels “over the top.”

“Crumble,” he said. So what about DirecTV, the sort of operation that will be negatively affected by the shift?

AT&T is fully prepared for erosion of the DirecTV customer base over time, as over the top streaming becomes a bigger market reality.

Verizon, for its part, has been more circumspect about linear video in recent years, arguing that the company doesn’t actually make much money from linear video subscriptions, and actually has more confidence in eventual over the top solutions.

The apparent differences in video strategy on the part of AT&T and Verizon might be less than they appear. It is a matter of timing only in part. Probably equally significant is that AT&T has a larger fixed network geographic footprint than does Verizon.

Linear video really is a scale business, and AT&T would benefit more than Verizon does from a successful linear video adoption rates by its customers. In the past, smallish numbers of video-capable households have been an issue for AT&T and Verizon.

For both firms, as for cable TV operators, the issue is the timing of the shift.

At the moment, many would argue that the “essential bundle” is high speed access plus linear video. How that might change in the future, when streaming video is the replacement product for linear subscription TV, is the issue.

But the timing matters. AT&T is betting that owning DirecTV will provide value long enough to justify the acquisition.

Still, if “channels crumble,” does the linear video business model also crumble? Even as it hopes to invest billions in linear video, AT&T also is saying the business eventually will diminish. So what happens to the triple play?

Verizon Predicts 2015 Results Similar to 2014: But What if Competition Gets Worse?

As has been the case for a couple of years, Verizon Communications fourth quarter 2014 financial results were robust enough to be the envy of many other tier-one service providers in the developed world. Top-line revenue growth was nearly seven percent.

Verizon also added two million net mobile accounts.

Verizon predicted continued solid growth for 2015, which many will consider even more important than fourth quarter results.

For 2015, Verizon expects consolidated revenue growth of at least four percent, profit margins (EBITDA) consistent with full-year 2014 results and strong free cash flow generation.

Mobile segment operating revenue climbed 11  percent in the fourth quarter.

Full-year total revenues to $87.6 billion, up 8.2 percent compared with full-year 2013.

Mobile segment operating income margin was 23.5 percent. Service EBITDA margin was 42 percent in the quarter. Full-year mobile segment EBITDA was 48.5 percent.

So no worries, eh? Well, that depends. How much competition Verizon faces in the U.S. mobile market is part of the uncertainty. Near term, the issue is T-Mobile US, Sprint and AT&T. But it looks as though Google will start to be a new factor in 2015.

In other words, past assumptions will have to be revised if Google gets into the mobile business in a significant way, adding even more instability in the market.

Verizon reported a loss of 54 cents per share, compared with earnings per share of $1.76 in the same quarter of 2013.

Revenue growth was strongly driven by equipment revenues, not service revenues. That is a nuanced performance, as observers had predicted that revenue would shift from recurring service revenues to device revenues as service providers shifted from a “subsidy” model to an “installment plan” model.

Recurring service revenue grew about 2.8 percent, down from the seven percent rate in the first quarter of 2014.

Also, mobile net adds were driven by tablet accounts, a trend that has been in place for more than a year. Of the two million net adds, 1.4 million were tablet accounts. So it is no surprise that average revenue per account dipped from $161.2 in the third quarter to $158.80 in the fourth quarter.

Mobile service profit margins dropped from 47 percent to 42 percent sequentially. Recurring service earnings dropped about eight percent (EBITDA).

In the fixed network segment, total revenues were $9.6 billion in fourth-quarter 2014, down 1.6 percent year over year.

Consumer revenues were $4 billion, up 4.1 percent compared with fourth-quarter 2013, with FiOS revenues representing 77 percent of the total.

If the competitive pressure accelerates, it is hard to say whether current expectations prove to be realistic.

Stand-alone Streamed HBO Might Cannibalize Linear HBO Quite a Lot, Study Suggests

HBO keeps arguing that its new streaming service targets consumers who buy high speed access, but not linear video subscriptions or HBO. In other words, a stand-alone, streamed version of HBO will not cannibalize HBO as sold by its video distributiors.

But there are some hints in a new survey that as much as 91 percent of the most-likely buyers of a streamed, stand-alone HBO service are, in fact, present buyers of HBO as part of their linear video subscriptions.

If so, the risk of cannibalization of linear versions of HBO, or perhaps even the whole linear video subscription, is extremely high. 

The new study by Parks Associates  finds 17 percent of U.S. broadband households are likely to subscribe to an over-the-top (OTT) video service from HBO.

Among these likely subscribers, 91 percent are currently buying linear video subscriptions, and nearly half say they would cancel their linear subscription service after subscribing to theHBO OTT service.

The research firm reports the average head of household in a U.S. broadband household watches nearly 3.5 hours of OTT video each week on a TV set.

Households with high speed access in 2010 consumed about 1.6 hours a week of Internet delivered video. In 2014, such households watched three hours a week.

In 2010, about 17 percent of video viewing in high speed access homes •was on devices other than the TV. By 2014, that figure increased to over 31 percent.

As you might guess, consumer younger than 35 watch less than seven hours a week of linear video on a TV. In 2013, the typical U.S. adult watched 4.5 hours a day. In other words, typical weekly TV viewing in 2013 represented 31.5 hours.  

Young consumers are also far more likely to say that online video is just as good as subscription TV, Parks Associates says.

The average monthly amount paid by broadband households for a linear TV subscription service has grownfrom $74 to $82 over the past three years, says Parks Associates.

The average amount paid per month for a triple play package (subscription TV, landline voice, and broadband) increased from $146 to $160 over the same period.

T-Mobile US Alters Credit Policies to Spur Smartphone Purchases

T-Mobile US, in a new credit policy it calls “Smartphone Equality,” will use a different approach to assessing potential customer credit, a move T-Mobile US expects will allow it to sell smartphones to a significant number of new customers.

The problem, says John Legere, T-Mobile US CEO, is that as many as 50 percent of potential buyers do not qualify for the best plans T-Mobile US and other leading U.S. mobile service providers offer.

“For years, companies have based decisions about who gets the best prices and even access to basic products and services solely on credit scores churned out by software from a credit bureau,” says Legere.

“With today’s announcement, every T-Mobile customer who’s paid their wireless phone bill on time for 12 straight months will qualify for our very best device pricing on every smartphone and tablet we sell − including zero down with no interest and no credit check,” says Legere.

Legere is banking on one key assumption: that “our relationship with that customer is actually a better predictor of future behavior than their credit history.”

Some will worry about the potential exposure T-Mobile US might be taking in terms of bad debt. Others will look for further pressure on AT&T and Verizon net customer additions.

Verizon Wireless added 2.1 million net retail connections in the fourth quarter of 2014, including close to two million net retail postpaid connections.

On the other hand, churn was  higher than usual churn and profit margins dipped. Verizon reported a quarterly loss of 54 cents per share, compared with earnings per share of $1.76 in the fourth quarter of  2013, based in part on charges related to benefit and pension plans.

T-Mobile US is counting on the new policies to increase the number of smartphone and tablet customers in its customer base, a development that spurs adoption of mobile data plans and bigger mobile data plans.