Weekly Telecom Notes: Verizon, Sprint and China Unicom

VZ: Verizon logo

The past week saw quite a few developments in the telecom sector. In an attempt to boost LTE adoption rates, Verizon (NYSE:VZ) unveiled a mobile video search app on Android that makes searching for videos across platforms such as Netflix, Hulu, Xfinity, FiOS et al easier and works only on LTE. Sprint (NYSE:S) went on an advertising spree promoting its iPhone unlimited plans as competitors Verizon and AT&T (NYSE:T) look to eliminate the plans altogether and promote tiered data share plans in their stead. Monthly subscriber data out of China showed that China Unicom (NYSE:CHU) continued to set the pace for 3G adoption in China adding more number of 3G subscribers in April than both China Mobile (NYSE:CHL) and China Telecom (NYSE:CHA).


With LTE promotion figuring at the top of Verizon list of to do items for the year, the carrier has come up with a video search application that works only on its high-speed 4G network. Christened Viewdini, the Android app searches for mobile content from a host of video services such as Netflix, Hulu, mSpot as well as Comcast’s Xfinity and Verizon’s own FiOS programming. LTE adoption rates have been sluggish so far but Verizon has built a LTE network wide enough to cover over 200 million Americans, or two-thirds of the U.S. population, and is well ahead of both AT&T and Sprint. With Viewdini, Verizon will be looking to promote the faster video streaming capabilities of its LTE network to generate interest as well as to boost data consumption on the underutilized network.

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However, promoting video consumption on LTE is at odds with Verizon’s earlier announcement that subscribers looking to upgrade to LTE will only be eligible for shared data plans and have to give up their unlimited 3G plans. (seeVerizon Looks To Substitute Unlimited Plans With Shared Data Plans For LTE) Although users can share the data among many mobile devices, their restricted nature will cause users to easily overshoot their data caps should they watch a lot of bandwidth hogging videos online.

We believe Verizon will be looking to alleviate these concerns by charging the content providers as well as streaming services for the video traffic that Viewdini generates for them, potentially giving subscribers unlimited access to the videos for little or no overage charge. Mobile data traffic is exploding and content providers as well as streaming services may not think twice before jumping  on the opportunity to boost subscription rates.

If Viewdini is indeed Verizon’s move to get video services to pay up for their subscribers’ bandwidth consumption, it will help the carrier increase its data revenues and ARPU levels at an even faster rate than what has been seen historically.

See our complete analysis of Verizon here


After Verizon and AT&T touted tiered data-share plans earlier this month raising subscriber heckles about the future of unlimited plans, Sprint has been cashing in on the opportunity to promote its iPhone unlimited plans. It is also offering a $100 rebate to new subscribers if they trade-in their existing iPhone from a different carrier for a new two-year contract with Sprint. [1]

Verizon and AT&T have already stopped offering unlimited plans to new subscribers and the former is planning to do away with the grandfathered unlimited users as well. Both have plans to introduce shared data plans and the latter will be looking to follow in Verizon’s footsteps and do away with unlimited plans completely. (see AT&T Looks To Reduce Subsidy Pressures While Boosting Revenues Through Shared Data Plans) In such a scenario, Sprint will remain the only national carrier to offer truly unlimited plans (T-Mobile throttles 3G speeds after a certain limit), which it is actively promoting to lure subscribers away from Verizon and AT&T.

The saturation in wireless growth makes it important for Sprint to differentiate itself from rivals and use that difference to poach subscribers from its rivals. Sprint has traditionally portrayed itself as the torchbearer of unlimited plans and has even gone ahead and said that it plans to keep its plans for 4G LTE unlimited as well.

See our complete analysis of Sprint here

China Unicom

China’s second largest wireless service provider, China Unicom (NYSE:CHU), added 3.3 million subscribers in April, down from 3.5 million added in March. [2] The company now has about 213 million mobile subscribers, up 1.6% from the prior month. China Mobile (NYSE:CHL) and China Telecom(NYSE:CHA) also released their monthly subscriber adds. Both of them showed a healthy number of 3G subscriber additions, but fell well short of China Unicom’s net 3G adds.

Moreover, the fact that China Mobile runs its 3G network on a proprietary homegrown TD-SCDMA standard has proved to be a big deterrent in securing smartphones that are compatible with its network. Even the iPhone, which has already been launched on the other two carriers in China, hasn’t made its way to China Mobile yet. China Unicom is taking full advantage of this to close the 3G gap with China Mobile by adding at least an equal number of 3G subscribers every month.

See our complete analysis of China Unicom here

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  1. Sprint Official Site []
  2. Company Investor Relations Monthly Data []