|[July 29, 2014]
Fitch: Equipment Installment Plans Make Mark on Wireless Business
CHICAGO --(Business Wire)--
The traditional subsidy model for wireless customers is undergoing a
transformation, according to a new report by Fitch Ratings. Rather than
customers continuing to receive a subsidized handset device in exchange
for a two-year service contract, the model is shifting toward a
no-subsidy purchase using equipment installment plans (EIP).
From a customer perspective, EIPs can simplify the purchasing process as
the cost of handset devices are more transparent and service costs are
more identifiable. Following T-Mobile's (News - Alert) launch of its Jump! equipment
installment plan during 2013, all of the major wireless carriers
responded with the launch of similar plans.
Postpaid subscriber net additions among the four largest wireless
carriers swelled to approximately 2.15 million units during
first-quarter 2014. Fitch estimates tablets were 77% or 1.7 million of
the 2.15 million postpaid subscriber units added during first-quarter
2014. This represents an uptick compared to fourth-quarter 2013, when
tablets comprised approximately 58% or 1.7 million of the 2.9 million
postpaid subscriber units added.
Fitch estimates the largest video service providers gained approximately
261,000 video subscribers during the quarter ended March 31, 2014 and
video subscribers increased by approximately 105,000 subscribers during
the year ended March 31, 2014. First-quarter 2014 marks the industry's
largest subscriber gain since first-quarter 2012. The largest cable MSOs
accounted for approximately 51% of video subscribers among the largest
multichannel video programming distributors. Direct-broadcast satellite
(DBS) service held approximately 37% of video subscribers share followed
by the large telephone companies with a 12% share.
The largest cable MSOs accounted for approximately 46.6 million video
subscribers, representing 50.8% of video subscribers among the largest
multichannel video programming distributors. Direct broadcast satellite
(DBS) service providers totaled approxiately 34.3 million video
customers (37.5% of video subscribers) and the large telephone companies
had more than 10.7 million video subscribers (11.7% of video
subscribers). The telephone companies gained 160bp of the multichannel
video subscriber market in 2013, as the cable MSOs lost 200bp of the
Fitch's special report 'U.S. Communications Industry Leaders Competitive
Scorecard' discusses trends in the 1Q'14 regarding the scope and depth
of the competitive overlap of leading telecommunications operators. The
report compares the competitive positions of the leading local exchange
carriers (LEC), cable multiple system operators (MSOs), wireless service
providers and direct broadcast satellite (DBS) operators. The report
also summarizes key operating metrics financial statistics, particularly
related to key forecast items such as revenue growth, margin changes,
capital re-investment and debt. Additionally, the report includes
summary comments concerning key developments in the quarter.
This quarterly report can be found at 'www.fitchratings.com'
under the following headers:
Sectors >> Corporate Finance >> Corporates >> Special Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: U.S. Communications Industry
Leaders Competitive Scorecard - First Quarter 2014
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
[ Back To Technology News's Homepage ]