Texas & California may see the largest dominant carrier post-merger
A MetaFacts TUPdate by Dan Ness, Principal Analyst
With the prospective merger of AT&T and T-Mobile, would the combined dominant share be very different in some states than in others?
Also, will the fog of merger give competitors enough pause to secure their unique clienteles, and attract more of the same?
Nationwide, the combined share of the top three carriers would increase from just over two-thirds (68%) to nearly eight in ten (78%).
Post-merger Carrier Domination
In our most recent wave of Technology User Profile, we found that three carriers – Verizon Wireless, AT&T Mobile, and T-Mobile, collectively hold a 68% share. This is based on the broadest active market – subscribers of mobile carriers using Smartphones or Basic Mobile Phones, with either contract or pre-paid agreements, and among online adults. Combining the subscriber share of AT&T Mobile and T-Mobile, this boosts Sprint into the top group, so that the top three carriers collectively command 78%.
There is a regional difference, in some cases due to the growing popularity of simpler more cost-effective prepaid agreements through MVNOs, and in other cases to the strength of regional operators.
The combined AT&T/T-Mobile share would be 50% or higher in two states: Texas with 55% and California with 50%.
In the Northeast, TracFone is popular enough to be included in the post-merger top 3 carriers, although with a distant 9% to AT&T/T-Mobile & Verizon’s collective 73%. TracFone’s Northeast share is buoyed by New York and Pennsylvania, where the 9% share is similarly far from the two leaders 70% and 73%, respectively.
Among the major states, Wisconsin is unique in the strength of regional carrier US Cellular, which holds a 19% share, even besting nationally-second Verizon. No other regionals have that position or share.
Across other states and regions, Sprint has a third-ranked position. In most key states, Sprint’s share is less than half of the second-ranked carrier.
Whether or not these heightened levels of market dominance constitute a problem will depend primarily on the Federal Communications Commission (FCC) and the Department of Justice (DOJ). One of their statistical tests for market concentration is the Herfindal-Hirschman Index (HHI) which summarizes the relative difference of shares. Industries with scores of more than 1,800 are considered concentrated. If post-merger, using our current market share results, Texas would have an HHI of 3,396, California 3,247, and New Jersey 3,208, up from 2,059, 2,154, and 2,547 respectively. Furthermore, the HHI would rise to 3,299 among contract subscribers and 1,716 among prepaid subscribers.
From the customer’s perspective we’ve gathered in findings of our TUP survey results, the usage profiles of AT&T and T-Mobile subscribers are different enough to show this will not be a simple merger. In fact, some customer usage types are unique enough they were already poised to seek better alternatives due to the way they use mobile wireless devices. That’s in addition to changes they might be considering beyond being triggered by the merger announcement, such as their satisfaction levels with customer service, their reception, or the complexity or costs of their subscription agreements.
The results in this TUPdate are drawn from the MetaFacts Technology User Profile Survey. Results specific to this topic can be obtained through a customized report and analysis. Or contact MetaFacts for the MetaFacts Technology User Profile Overview Edition report, which covers the broader range of key trends. View findings in 25 pages of executive summary analysis, 200+ pages of charts and graphs, all supported by 95+ pages of detailed tables. The complete, 300+ page report is delivered to you electronically. This edition is for the U.S. based on the 2010 wave of Technology User Profile gathered among a scrupulously selected set of representative respondents, surveyed both online and offline.
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