The numbers are in for Verizon’s second fiscal quarter of 2011, and from a 4G wireless provider standpoint the market leader is still Sprint by a pretty big margin, since Verizon only added 1.2 million new LTE subscribers during the most-recent fiscal reporting period.
Now 1.2 million devices ain’t shabby — by our unaudited account when added to the half-million previous subscribers that gives Verizon approximately 1.7 million subscribers on either smartphones or portable modems for the 4G LTE network it launched back in December. But that 1.2 million number is well below the 1.6 million 4G smartphones actived by Sprint during Q1, according to more unofficial Sidecut Reports math that put Sprint’s 4G subscriber number somewhere in the 4 million ballpark at the end of Q1.
Thought Sprint is due to report quarterly numbers later this week we probably won’t get a handle on Sprint’s 4G numbers until its network partner Clearwire reports its quarterly earnings in early August, thanks to the kabuki dance Sprint performs by not just coming out and saying how many 4G devices it has sold. But with several new 4G devices launched this year it’s safe to guess that Sprint probably added maybe another million 4G subs during Q2, so Verizon is still way behind in the 4G race after 7 months of playing, by a score of something like 5 million to 1.7 million.
(I guess that is why the world needs analysts and reporters, to sort through the fiscal gymnastics. Since this is free of charge — you’re welcome! Especially all you scraper blogs. Thanks for the traffic.)
While Sidecut Reports wasn’t available to listen in on the call this past week — hey we were part of a great webinar on Thursday, you should listen to it — scouring the transcript of Verizon’s call on Seeking Alpha we didn’t see much “color” from the Verizon execs on 4G numbers. You can begin with Verizon’s reluctance to even break apart its “1.2 million LTE devices” number into segments of how many of those were smartphone subs and how many were LTE modems, either USB modems or the portable Wi-Fi hotspot models.
That’s not a sign of selling strength, which probably means that the previously hot-selling Toonderbolt has cooled off a bit — or possibly that the new Verizon LTE customers are being spread out amongst the carrier’s numerous Android LTE offerings. And there was no mention on the call about the still-missing Motorola 4G phone, or the long overdue 4G upgrade for the Motorola Xoom tablet. Again, not exactly a Rule the Air kind of market strength. But hey, these new networks are complicated things.
More signs of potential trouble in LTE land is Verizon’s unwillingness to talk about data usage by 4G customers (”We don’t get into disclosure of any 4G LTE device usage at this point”) and its claim that most of its customers will probably be happy with a 2 GB per month data download limit — which to us sounds like the same kind of short-sighted thinking that got AT&T into trouble when it launched the iPhone. First, read this quote from incoming Verizon CEO Lowell McAdam below (from the Seeking Alpha transcript) about tiered pricing and data limits:
In my view is that tiered pricing is like gravity. The industry has to get there because there is not unlimited spectrum. And when you look at the utility of the devices that we offer and the video demand that is going to be hitting the devices, it’s inevitable. Now each carrier will be in a slightly different position because of their spectrum holdings and their capacity on their networks. So I think over time, there may be some that hold out longer with unlimited, and I wouldn’t be surprised if unlimited comes back in and out from a promotional perspective for carriers to balance growth. But in my view, it is — as I said, like it’s inevitable. So do I expect to see some churn impacts? Sure. There will be some users that are very high users that will want to move between carriers to find whatever opportunities they can to continue that. But our strength has always been the best network and the best customer service, and at 2 gigs, well over 95% of our customers are underneath that demand. So I don’t think there will be tremendous disruption.
Good reasoning — for now — but what happens when all those smartphone 4G customers start believing the Verizon marketing hype that tells them they should be streaming movies to their phones? Or what happens if they want to watch the NFL on their blazing new network? What happens to that 2 GB per month number then?
My quick overall take is that Verizon is running into some big and maybe not unexpected hurdles with its new network, which may require more time and money to solve. The good news is, Verizon is minting money so it has the cash on hand to cover a lot of errors in guesstimating the costs, time schedules and other problems that are cropping up with its LTE deployment. The bigger warning may be: If Verizon is having these problems with a greenfield deployment, how long will it take AT&T to get its LTE network up to speed? Three years? Five years? This stuff is, apparently, a lot harder to make work than even the big carriers’ PR departments would have you believe. So LTE buyer, beware.