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With Wireless Data, Smaller Carriers Must Mind the Gap

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The floundering economy hasn’t kept consumers from spending on mobile data, according to the latest quarterly report on the wireless industry from Chetan Sharma, one of our GigaOM Pro analysts. U.S. data service revenues grew 27 percent year-over-year in the third quarter, Sharma reported, with Verizon Wireless (s vz) and AT&T (s t) accounting for 80 percent of the rise, underscoring what I wrote last week about how the rich carriers are getting richer. Given the investment needed to build out new networks, and the incredible growth in data, both the smaller carriers and U.S. regulators should mind the growing gap between those that are raking in the wireless data dough and those that are not.


Verizon’s data revenue exceeded $4 billion during the quarter, and is now approaching longtime global leader NTT DoCoMo.  Overall, the top four U.S. carriers “are now a permanent fixture” among the top 10 worldwide carriers in terms of mobile service revenues. Other nuggets from Sharma’s report include:

  • 3G penetration in the U.S. stayed at “a healthy” 43 percent in the third quarter of 2009, with Verizon outpacing its competitors and T-Mobile slowly expanding its 3G coverage. The growth in 3G and smartphones helped offset some of the downward pressure on the data revenues and overall ARPU.
  • Flat-rate pricing continued to gain steam in the U.S. market with industry-wide flat-rate pricing plans that included data. Almost all of the major carriers are offering flat-fee access plans for most of the new smartphones being introduced in the market, and roughly 20 percent of the consumers have flat-rate data plans.
  • The subscriber gap between the two largest carriers (AT&T and Verizon) and the next-largest two (Sprint (s s) and T-Mobile) will continue to increase, Sharma predicts, rising from 28 percent.

U.S. mobile data traffic is likely to exceed 400 petabytes by the end of 2009, according to Sharma, up 193 percent from 2008. And that increased usage is forcing carriers to accelerate their 4G strategies and adopt a multipronged model to manage traffic more effectively. With the larger carriers seeing the greatest revenue gains from data, it stands to reason that as more investment is needed to “keep up with the Verizons” both AT&T and Verizon will continue their data lead. That’s bad news for T-Mobile and Sprint. Sprint’s investment in WiMAX was its attempt to get out in front of this demand for data, but so far it looks like its timing may have been off.

5 Responses to “With Wireless Data, Smaller Carriers Must Mind the Gap”

  1.  Scenna Tabesh here, Director of Marketing Communications at the WiMAX Forum.
     There is no question that AT&T and Verizon are making profit off of their 3G data service offerings; there is also no dispute that these service providers are charging high prices for lackluster speeds and performance. WiMAX is more cost effective than 3G, with an open business model that allows carriers flexibility in pricing, service offerings and scalable bandwidth.
    The time to offer mobile broadband service to consumers is now and Sprint (along with Clearwire, Comcast, Time Warner Cable, and multiple other WiMAX providers) are the only U.S. operators doing that today. The author states that “increased usage is forcing carriers to accelerate their 4G strategies.” This really means that the other carriers are now going to have to play catch-up with Sprint with regards to optimizing their networks for the real mobile Internet.  We believe the people who think WiMAX timing is off are the same players simply trying to garner a profit from 3G investments while WiMAX carriers are offering faster, cheaper, better performing broadband today. With data usage rates up 193 percent over 2008, will VZW and AT&T be able to hold their lead once consumers get a taste of 4G speeds?
     We continue to see growth in the adoption of WiMAX technology throughout the world. Looking even beyond the achievements of Sprint and other players in the US, there are more than 518 live WiMAX deployments in 146 countries today.
     If anyone wants to continue this conversation please visit us our interactive site for 4G conversation at

  2. I spent 5 years in Germany and the market is MUCH different there. The wireless companies still have contracts, but things are less expensive in some ways and more in others. On top of this, everything is GSM based SIM, so you can move easily between all networks (ok, no SIM in the iPhone, but you get the idea).

    I think WiMax is catching on in areas, like here in Portland, Oregon, but I think the roll out is going way too slow for it to matter. On top of that WiMax was touted as this savior of wireless and it just isn’t living up to it yet.

    Interesting graph though. Watch out for TMobile over the next few years. They’ve cornered the European market and will probably start going hard in the US after the economy picks up.