Wireless Telecommunication Carriers The Industry Pricing Strategies Penetrative Competitive

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Wireless Telecommunication Carriers The Industry Pricing Strategies Penetrative Competitive

Moon, Kim, Managing Editor has reference to this Academic Journal, PHwiki organized this Journal Tillman Elser, Isabelle Nunberg, Nikkita Mehta, Julie GreenbergWireless Telecommunication CarriersThe IndustryGeneral BackgroundConsumersMain PlayersCompetitionPricing StrategiesBundling in addition to VersioningThree Part TariffNetwork ExternalitiesTacit CollusionPenalty PricingDiscountsCell phone pricingRecommendationsInvestmentsAgendaThe Industry- General Background- Consumers- Main Players- Competition

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Wireless voice communication Text Messaging services (SMS) Advanced PCS (personal communication services)Other data servicesOther wireless servicesPrimary ProductsLower pricing -> competitive advantage over wired servicesConsumers embracing newer/more expensive technologyRetail presence decreasing in importanceIndustry SnapshotIBISWorldCorporate clients (15%)Stable market characterized by long term contracts in addition to predictable patterns of usageMost concerned with reliability (voice) in addition to speed (data)Big target as long as 4G technologySmall/Medium Businesses (30%)Laptop data plans in addition to fixed mobile services attractive to this marketGeneral consumer/residential clients (55%)Most price sensitiveDem in addition to growing fastest in this groupPrimary Consumers

Heterogeneous preferences as long as cell phone usageHigh useLow useFocus on DataFocus on VoiceFocus on Text vsDifferentiation among consumers Why pricing beyond Minutes is important.24.8% – Cost of service14.5% – Depreciation12.5% – Equipment Purchases8.4% – Wages5.9% – Advertising6.7% – Rent/Utilities fees6.5% – Profit~20% other expensesExpenses Breakdown

1G Analog, usage stopped in 20082GBasic voice in addition to data functionalityPopularity declining as newer st in addition to ards develop14.4Kb/s2.5GStepping Stone from 2G to 3G50-150Kb/s speedWireless Application Protocol (WAP) mobile Internet as well as MMSMost advanced iteration of 2.5G is the EDGE network (AT&T/T-Mobile)200-1000Kb/sNetwork Technology3GCurrent st in addition to ard among smartphonesBeginning to assume market dominance from 2G in addition to 2.5GSpeeds of 300-600Kb/s3.5GMiddle ground between 3G in addition to 4GSpeeds up to 14.4Mb/sAT&T/T-Mobile4GEpitomizes shift from voice to data among telecommunications carriersConflict between WiMax (Sprint) in addition to LTE (Verizon) st in addition to ardsSpeeds up to 100Mb/s as long as mobile devices (1Gb/s as long as stationary devices)Network Technology (cont.)Market ConcentrationTrends of M&AMethod to gain subscribers in addition to coverage Saturated market: harder to build new customer baseEconomies of scaleHigher margins in addition to available capital enable firms to invest in their networks in addition to services

Market ConcentrationTop 4 Firms Market Shares:Verizon Wireless: 33.4%AT&T Inc.: 31.2%Sprint Nextel Corporation: 16.2%Deutsche Telekom AG (T-Mobile): 11.0%CR4 = 91.8HHI = 2472.4433.4% of market (market leader)Part of Verizon Communications– VW contributes almost 2/3 of revenueOriginally merger of three companiesAcquired Alltel in 2009 to give VW largest market share in industryNow transitioning to 4G LTERevenue growth of 11.7% annually over past 5 yearsIn 2011, expected to generate $66.1 billion in revenue in addition to net income of over $4.4 billionVerizon Wireless31.2% of marketLargest market share until Verizon-Alltel mergerStarted as joint venture called Cingular WirelessIn 2006, AT&T acquired both companies in addition to became AT&T Inc. AT&T wireless contributes to ½ of company revenuePlans to acquire T-Mobile within next 12 monthsProblem of congestion on data networksRevenue growth of 10.3% annually over past 5 yearsIn 2011, expected to generate $61 billion in revenue in addition to net income of $16.5 billionAT&T Inc.

16.2% of marketSprint in addition to Nextel merged in 2005Only major company losing subscribersBacks WiMax instead of LTE as long as 4G networkAnnual revenue decline of 4.1% in addition to has failed to turn a profit since 2006Sprint Nextel Corporation11% of marketBr in addition to of Deutsche Telekom AG in USFirst wireless carrier to offer Android phonesLarge carrier of WiFi with T-Mobile Hot SpotsPlans as long as AT&T to acquire T-MobileIn 2011, will generate $28.2 billion in revenue in addition to net income of $1.8 billionT-MobileCompetitionHIGHEST in whole telecommunications sectorWHYChurn rate of 1.5% to 3.5% per monthTypes:PriceService offerings & quality of serviceProduct innovationNetwork dependability in addition to call qualityMarketing strategiesGeographic coverage

Firms all offer similar products, coverage, in addition to services price competition is vitalTry to undercut competitionDiscounts, network externalities, etc.Partly enabled by recent M&A activity by improving firms’ economies of scale Competition: PricingService becomes important weapon in the industry as customers increasingly value reliability in addition to attentionHigh investment in upgraded technologies in addition to networksCustomer service becomes vital in gaining customer loyalty in addition to reducing churn ratesExpansion of service offerings: “one-stop” bundlesTelecommunications Act of 1996Competition: Service Offerings & Quality of ServicesNew technologies incredibly useful in increasing usage, margins, in addition to customer baseShort life cycles as long as products in addition to applicationsNew technology includes:E-mailGPS mappingTV feedsE-commerce 3G 4GCompetition: Product Innovation

Promotional tacticsRebates, discounts, etcAdvertisingSupply side: Combative advertisingMature market; goal is to shift consumer dem in addition to toward advertising firm but not exp in addition to ing consumer dem in addition to Dem in addition to sidePersuasive: alters consumers tastes based on service providers’ attributes, strengthens barriers to entry especially in industry with economies of scaleComplementary: appeals to “social prestige” with new phones, appeals to attributes complementary to use (coverage, overage, etc.)Competition: Marketing StrategiesUltimate goal: maximum US nationwide coverageEnables furthering economies of scale in addition to higher efficiencyOver 277 million Americans (approx. 91%) can choose between three or more providers while 250 million of those Americans (approx. 82%) can choose between only top fourCompetition: Geographic CoverageMobile virtual network operators (MVNOs)Companies that purchase airtime from a major wireless network then resell it with their own logoIncreasing as communications in addition to media leaders have recognized potential growthMobile strategies developed by Comcast in addition to Time Warner CableGoogle looked into bidding in 700MHz auction in 2008 External Competition

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Barriers to EntryBarriers to entry are high in addition to increasing primarily due to Regulating spectrum scarcityHigh costsMarket saturationSpectrum scarcity refers to a finite number of companies being able to operate cellular/PCS services with a designated geographic location in addition to frequencyDistributed through licenses within a specified areaClosed to new entrants until next auctionCost at time of auction is high; over $19 billion was spent in 2008 700 MHz auctionBarrier: Spectrum Scarcity RegulationsHigh initial costsBase stations, towers, in addition to other necessary infrastructure reaches the billionsCosts of R&D in addition to other investmentsDependency on product innovation in addition to up-to-date technologiesMarketing strategiesBarrier: High Costs

Existing firms already established their strong positionsCost advantages due to economies of scaleAbility to spread expenses over large customer base“one-stop” bundles differentiate from pure wireless providers in addition to reduce churn ratesSlowing growth in customer baseBarrier: Market Saturation- Bundling in addition to Versioning- Three Part Tariff- Network Externalities- Tacit Collusion- Penalty Pricing- Discounts- cell phonesPricing StrategiesFeature bundling on cell phones -> facilitates feature bundling on contractsCustomers pushed onto smart phonesIncreases access to additional featuresVersioningFamily plan vs Individual planExtensive bundling seen in cell phone plansConsiderable variance between companies Common themes: Avoid pure bundling, target heterogeneous preferencesBundling in addition to Versioning

Venture CapitalistHigh barriers to entryCompetitive advantage of established firms enter market as a (Mobile Virtual Network Operator)Focus on attractive data packagesStock Market AnalystVoice in addition to SMS capabilities in addition to prices maturingFuture success dependent on 4G deploymentVerizon: InvestInvestmentRace to 4GCarrier with the most comprehensive 4G network secures a substantial competitive advantageUtilize Network Externalities Data usageData usage within network free (non unlimited plans)iPhone liveSubsidizeConsumers more willing to accept expensive plans when high tech smart phones more accessibleReach as long as the Cloud(s)Improvements in networks’ data capabilities Cloud computingHuge potential market, especially among corporate clientsFurther use of network externalityRecommendationshttp://www.ashworthcreative.com/blog/wp-content/uploads/2011/02/cellphone-usage.jpgQuestions/Infographic

Moon, Kim Managing Editor

Moon, Kim is from United States and they belong to Alabama Wildlife and they are from  Millbrook, United States got related to this Particular Journal. and Moon, Kim deal with the subjects like Outdoors/Nature; Wildlife

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