Moore: Holiday wireless competition is very, very different in 2020

Jeff Moore Industry Voices

Wireless competition for the 2020 holiday season is different. Really different, for so many reasons.

First, transactions have shifted to online.

A Verizon Business holiday trends report stated that U.S. Black Friday and Cyber Monday online shopping traffic was up 200% over 2019 levels, while online shopping traffic on Thanksgiving was up 560% over 2019 levels. These numbers are for U.S. e-commerce broadly, but telecom also had a shift toward online commerce.

Carriers practically asked customers to avoid their stores. “How You Can Do Black Friday from Your Device” was the headline of an 11/20 blog posting by T-Mobile. Verizon heavily pointed to its two-day free shipping option and to ordering online for “touchless pickup.”

A Verizon corporate store visited on Black Friday 2020 had no customers, just four bored reps playing with their phones.  The same store was also visited on Black Friday 2018, when seven Verizon reps were dealing with 31 customers and the wait time to talk to a rep was 80 minutes.

Fewer stores. And no Sprint.

There aren’t as many stores as there used to be. Setting Xfinity and Spectrum aside, all carriers are reducing their store counts and lower in-store transactions during the holidays will only exacerbate this trend. Compared to November 2019, there are 8% fewer postpaid carrier stores, with the consolidation of T-Mobile and Sprint stores as a major factor. 

This is the first holiday season without Sprint. In recent years, Sprint ran raucous “iPhone season” TV ads, but that isn’t happening this year. The carrier’s aggressive discounting is not a part of the competitive mix this year. Sure, Xfinity Mobile has a lead offer of $250 off iPhones, and Spectrum Mobile continues to pitch savings via mixing and matching of its unlimited plan and its “By the Gig” plan.

This is the first holiday season with broad availability of 5G phones. Carrier ad spending was heavy in November and 5G was a major theme. Top phones – including the new iPhone 12 variants – all have 5G now. Finally, all three carriers have nationwide 5G. Without question, 5G is undergoing a hockey stick of accelerated adoption. 

What does this mean? For revenues, not much. T-Mobile is emphasizing that 5G is now included “at no extra cost.”  Verizon is quietly providing its new nationwide 5G access with all plans, including its plans with limited buckets of data.  AT&T includes 5G with all of its unlimited plans.

Customer interaction is different

The carriers are doing the same things in stores that other retailers are doing, including social distancing, requiring masks, using plexiglass shields, and wiping down surfaces. But that’s not all. A few months ago, AT&T and its Cricket Wireless subsidiary developed video chat options offered via pop-ups on the carriers’ websites. Recently, Verizon has done the same thing. The carriers have been more proactive about curbside service than nearly any other industry, apart for the restaurant industry. AT&T even has an online virtual store.

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AT&T’s approach to offers changed in October. Its top offers are available to new and existing customers, with more of a focus on device trade-ins than on new lines. What is the impact? There is an increase in short-term device subsidies that AT&T hopes will be outweighed by reduced churn and higher service revenues, as AT&T customers taking these deals are agreeing to an unlimited plan in 30-month installments – meaning that even in early 2023, customers will still be paying for unlimited data.

This isn’t quite a return to the old days of $200 iPhones and higher-costing plans, but it is a step in that direction. It may not be a coincidence that this renewed focus on AT&T’s base comes in the same year that Sprint – a feisty competitor with dicey customer service – has left the scene.  A question for 2021 is whether Verizon shifts more focus to its base.  After all, Verizon has the largest customer base to defend.

What about holiday 2021?

Presumably, the pandemic will be under control well before late 2021. However, carriers and subscribers both have adapted to different ways of doing business, so there is likely to be a higher “water level” for transactions done online and via apps. There will be fewer stores. The novelty of 5G will have worn off. Sprint’s exit from the scene likely will be followed by Tracfone’s exit. 

One thing is certain about 2021. It won’t be any weirder than 2020.

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.