A fierce battle broke out this summer among the four major wireless providers, each one trying to offer more data for less.
Sprint got the ball rolling by offering to double the amount of data you would normally get after a failed attempt to acquire T-Mobile. And, while AT&T, T-Mobile and Verizon Wireless were all quick to respond with their own discounts, some have dug more deeply than others.
Arguably, the most reluctant of the pack to cut prices has been Verizon Wireless, the U.S.’s largest wireless carrier, which prefers marketing their service as a superior offering at higher prices.
In its third-quarter earnings call today, the company’s CFO Fran Shammo confirmed its measured approach to Sprint and T-Mobile’s promotions. “We take a very rational and logical approach to what we’re going to respond to,” he said, according to a Seeking Alpha transcript.
Indeed, Sprint and T-Mobile are taking an aggressive, some may call Hail Mary approach to the market, by trying to add new customers at low prices in hopes of keeping them around for the long term. In particular, T-Mobile’s approach has been to make a series of marketing announcements, under its “Un-carrier” initiative that tries exceedingly hard to disrupt the industry and make fun of the competition.
“For at least the last four quarters, the question has been whether Verizon will eventually be dragged into the muck and mire of the rest of the industry,” said Craig Moffett, a telecom analyst for MoffettNathanson Research in an interview with The New York Times. “Each time, through both their comments and their results, they have made clear they can happily and successfully float above the fray.”
Verizon reported a Q3 profit of $3.7 billion, or 89 cents a share, on revenue of $31.6 billion for its wireline and wireless businesses. It added 1.53 million wireless connections in Q3 (1.1 million new tablet customers, but only 457,000 postpaid smartphones).
While sitting on the sidelines of this price war may not appear as a huge growth strategy to some investors, Verizon did offer a reason why it will continue to add subscribers at a fast clip during the current quarter. Verizon said two years ago in the fourth quarter, it activated 3.1 million 3G iPhones since it was the first time it offered a free Apple device to customers signing a new two-year contract. A majority of those customers will be coming off contract during the final three months of the year.
Will the those customers stay with Verizon?
“You should expect from us that our upgrade rate will increase,” Shammo said. “We have the highest backlog of any previous launch of an iPhone that we have coming into the fourth quarter.”