Moore: Holiday wireless competition is halfway back to normal

Jeff Moore Industry Voices

Holiday wireless competition is not back to normal, as things were before the pandemic. A year ago, I wrote in FierceWireless that holiday wireless competition in 2020 was “very, very different.” This year, things seem halfway back to normal.

RELATED: “Moore: Holiday wireless competition is very, very different in 2020”

Store traffic was way up from Black Friday 2020, but not to normal levels. Black Friday retail traffic fell by 28.3% compared with 2019 levels, but was up by 47.5% versus Black Friday 2020, per data from Sensormatic Solutions, as reported by CNBC on November 27. Checks of carrier stores and national retailers on Black Friday indicated a similar situation for wireless carriers. I visited the mobile department of a Target store and a rep told me that sales were 80% of Black Friday sales before the pandemic, but he said that Black Friday 2020 sales were 30% of normal.

At a Verizon store, the parking lot was packed, and the store had a dozen visitors. A rep pitched family plans to me. At the same store before the pandemic on Black Friday, I was placed in a queue that was an hour and a half, and the store had nearly 30 visitors, with some of them camped out on the floor. The Best Buy had probably eight times as many cars in the parking lot that it would have on a Friday afternoon, but the store traffic was not the same circus as in years past. This pattern applied generally at stores visited in Kansas and California.

Some top retailers launched their Black Friday offers in October, as USA Today reported on November 5. Stores were generally closed for Thanksgiving, unlike recent years.

Not normal – the handset shortage

Since the pandemic started, carriers have been urging customers to purchase devices online. In 2020, this was motivated by coronavirus prevention. Since mid-2021, this motivation has changed. Most adults are now vaccinated, but there has been a handset shortage related to low global chipset supply. With many top smartphones not in stock at carrier stores, reps are telling customers that their best bet is to order smartphones online.

Holiday advertising is solid

One aspect of competition nearly back to normal is advertising. Wave7 Research recently reported that Verizon was the top spender on national TV advertising during the week of Black Friday, even surpassing deep-pocketed insurance giants. During that week, the lion’s share of Verizon spending was for this “Family Portraits: iPhone 13 Pro + $800 Off” TV ad, featuring Saturday Night Live’s Kate McKinnon. The ad pitched $800 in discounts with port-in and an unlimited plan.

T-Mobile was among the top five spenders in the U.S. during that week, and its top ad was this “Apple Holiday Bundle: Talk Show Customer” TV ad. It presented T-Mobile’s lead Black Friday offer of $1,000 in iPhone 13 credits, free AirPods, and a free year of Apple TV+ for customers who trade in a valuable iPhone and choose the high-end Magenta Max plan.

AT&T’s advertising has been solid also, with strong airings of this lead “All Americans: $1,000 Off” TV ad.

Adios, Sprint; Hola, cablecos

In late 2019, Sprint still had 3,800 stores and a healthy ad budget. “iPhone season” would be declared late in the year, as seen in this “iPhone Season: iPhone X” TV ad from fall 2018. That promotional energy and ad budget added to the competitive mix every year.

The cablecos are increasingly filling this void, at least in part. “Our Best Wireless Deal of the Year” was an Xfinity Mobile Black Friday TV ad that aired nearly 2,000 times in a two-week period ending in early December, and Xfinity had other TV ads as well. Xfinity Mobile’s Black Friday offer of “up to $1,000 in savings” on top phones looked very much like offers normally seen from the national carriers. Sure, the offer required port-in and qualifying trade-in, but carrier offers usually have similar caveats.

Sprint was nationwide, but the cablecos are not. Xfinity Mobile and Spectrum Mobile compete in most markets, not all. For perspective, Xfinity and Spectrum combined have fewer than one-third as many stores as Sprint had.

Cox is expected to launch wireless service in its markets, but that’s a story for the holiday season in 2022. Dish Wireless could also be part of the mix for 2022, so the void left by Sprint’s exit is gradually being filled.

Offers are halfway back to normal

Postpaid phone churn is well under 1% for all three national carriers and seems stable. This is another way of saying that postpaid customers are by and large not taking carriers up on their switcher offers, and carrier offers now reflect this reality.

AT&T makes its top offers available to new and existing customers. These discounts of up to $1,000 even with upgrades are generous, but now require a customer to sign up for 36 months of unlimited service, helping AT&T to secure its base. Verizon did something similar in the weeks following the iPhone 13 launch.

With fewer switchers, carriers during the holidays are more focused on getting more revenue from each customer. T-Mobile’s top holiday deals require Magenta Max. Verizon in 2021 has generally required premium unlimited for its top deals, but the carrier dropped that requirement before Black Friday. The carrier has been outperformed by AT&T and T-Mobile in recent quarters and probably did this to boost subscriber adds.

Top holiday prepaid theme:  Free 5G phones for switchers

The top ad theme in prepaid for the holidays is free 5G phones for switchers. Metro by T-Mobile has led the way with the heaviest ad spending and by offering five 5G phones free to switchers. The carrier has heavily aired this “Holidays: Big 5G Upgrade” TV ad, which pitches five 5G phone models as free for switchers.  Cricket Wireless is pitching the Cricket Dream 5G as free for switchers, as seen in this “Hoidays: Winter Wonderland” TV ad, which is airing heavily.

Boost Mobile did not do any TV advertising in early November. However, the carrier in mid-November launched this “Holidays – Money is Power: Free 5G Phone” TV ad. It has aired solidly, touting the new Celero5G, which is free for switchers.

Holiday 2022 will be closer to normal

Wireless competition is halfway back to normal. Next year, the chipset shortage likely will be over. The pandemic is increasingly under control. There should be wireless competition from cable companies in nearly every major market. Online purchasing will take a bite out of store traffic, but the wireless industry is increasingly getting back to normal for holiday competition.

Jeff Moore is Principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition.  Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.