IDG News Service - The two biggest mobile operators in the U.S. are fiercely competitive and closely matched in size. So will AT&T's proposed multibillion-dollar acquisition of Leap Wireless change the balance?
Market figures and interviews with analysts suggest it won't, but they also show that today's complex mobile industry may need new ways to define success.
Late last week, AT&T announced its intention to acquire Leap, operator of the Cricket prepaid mobile service and one of the last remaining large regional carriers in the U.S. In addition to paying about $1.2 billion for Leap's stock, AT&T will assume the company's debts of $2.8 billion. Leap has approximately 5 million customers, whom AT&T plans eventually to migrate from Leap's CDMA network to its own GSM-based technology. Eventually, they'll converge on 4G LTE, which both companies already use.
At first glance, it looks like a deal that will extend AT&T's subscriber lead over Verizon Wireless. In a presentation on its website, AT&T says it has 107.3 million "wireless customers," while Verizon's site claims just 98.9 million "retail connections." But it turns out those two figures aren't as similar as they may seem. AT&T acknowledges that the right number to compare with Verizon's total, counting just postpaid and prepaid subscribers, is just under 77.9 million.
There are many different ways of measuring a carrier's size, and counting up accounts, retail or not, may not be the most meaningful anymore. The figure Verizon gives is lower, but it leaves out several types of customers that could make up the difference and then some.
"Verizon Wireless is the largest wireless carrier in the United States based on retail connections, including both postpaid and prepaid. Some other carriers include reseller connections and connected devices, such as e-readers and machine-to-machine connections in their numbers," Verizon spokeswoman Robin Nicol said in an email message.
While phones are typically associated with a particular customer who regularly pays for service, other devices and uses of mobile networks can't be defined so easily. For example, users of Amazon Kindle e-readers get access to AT&T's network without ever paying a monthly bill because the cost of the service is built into the hardware price. Likewise, remote sensors in vehicles and buildings connect to a network but don't represent a big monthly payment or, possibly, any recurring revenue at all.
Still, those alternative connections are one possible measure of a service provider's success -- or failure. Verizon stopped reporting machine-to-machine and other connections after 2011 because they were falling, analyst Roger Entner of Recon Analytics said.
In 2011, Verizon's adjusted results for "wholesale and other connections" declined 77.5 percent from the previous year. Beginning in the first quarter of 2012, those connections were not included in the company's quarterly or annual reports.
