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Summary:

Of all of the mobile operators that T-Mobile is challenging with its Un-carrier strategy, Verizon is the most traditional of them all. But as Verizon’s Q4 earnings show, it’s a model that still works.

T-Mobile’s Un-carrier strategy is supposed to be shaking up the mobile industry, but judging from its fourth quarter results, Verizon Wireless doesn’t seem to have noticed. Not only did the country’s largest carrier added another 1.7 million net subscribers in the quarter, but Verizon’s business model — which T-Mobile has long criticized for being consumer unfriendly — seems to be paying off handsomely.

Of its 1.7 million net customer adds, 1.6 million were postpaid contract subscribers, and of those, 824,000 were new phone customers. The remaining 750,000 signed up for data-only devices, mainly tablets. Verizon had 625,000 net tablet activations in Q4, and it now has a 3.6 million overall connected slate customers. In total, Verizon now has 103 million subscribers.

Verizon Q4 2013 results

What’s more, Verizon didn’t exactly have to slash prices to bring those customers on board. It’s Q4 service revenues jumped 8.3 percent year over year, and its average revenue per subscriber account increased 7.1 percent to $157.21 a month. It now has 35.1 million customer accounts, with an average of 2.76 devices in each account. Nearly half of all of those accounts now pools data using Verizon’s Share Everything plans.

Verizon continues to grow its smartphone base with 8.8 million new activations in Q4, and it continues to migrate its customers over to its LTE network, which recently got a substantial upgrade in major markets. Verizon recorded 9 million LTE device activations and estimates that 69 percent of its data traffic now traverses its 4G networks.

Verizon's LTE coverage in dark red

Verizon’s LTE coverage in dark red

Verizon’s strategy is pretty obvious. While T-Mobile is trumpeting the joys of no contract plans and individual cheap data plans, Verizon remains committed to contracts and moving its customers to shared data plans. In a saturated U.S. market, there’s not much growth to be had by adding new subscribers, but Verizon feels it can add more connections and sell more data to the subscribers it already has. And so far that strategy is succeeding.

Does this mean that’s T-Mobile’s Un-carrier revolution is fizzling out? Not necessarily. While T-Mobile probably hoped to make more of a dent in Verizon’s growth, it’s main target is AT&T, and Ma Bell is definitely showing signs its feeling pressure from the upstart carrier.

In the last six months, AT&T has acted much more radically in changing up its pricing model in the wake of the T-Mobile threat. AT&T has countered T-Mobile’s Jump upgrade program with its own trade-in plan Next. It’s introduced a whole new tier of cheaper mobile data plans for customers who buy their phones and eschew contracts. And on Monday it even began forgiving contracts for its customers in an effort to move them to its new pricing plans.

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  1. Verizon Chief Financial Officer Fran Shammo acknowledged on Tuesday during a conference call with investors that the company is “seeing a certain segment of our base is responding to competitive offers,” adding that the company would “respond accordingly.”

  2. Ask Verizon about porting ratios ( phone numbers added from a particular carrier versus numbers lost to that carrier). T-Mobile US is porting in way more Verizon customers than they are porting out to Verizon. Same story with AT&T and Sprint. Uncarrier is winning.

    1. Do you have proof of these porting ratios numbers?

  3. So, we’re ignoring the fact that Verizon, since T-Mobile’s UnCarrier strategy was unveiled, has not matched its subscriber growth, quarter over quarter:
    Q1 ’12: 734,000
    Q1 ’13: 670,000
    Q2 ’12: 1,200,000
    Q2 ’13: 941,000
    Q3 ’12: 1,800,000
    Q3 ’13: 1,100,000
    Q4 ’12: 2,200,000
    Q4 ’13: 1,700,000
    Sure, Verizon is still growing, but, it would appear to me that with an average lowered growth of roughly 300,000, T-Mobile’s strategy definitely has worked in slowing down Big Red, but, of course, hasn’t stopped it.

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