Why does US Smartphone Market Continue to Grow Rapidly? / Digital Information World

T-Mobile and AT&T are the biggest winners in US smartphone subscriber growth, adding more than 800,000 and 700,000 postpaid phone users, respectively. Meanwhile, Verizon saw its phone subscriber base decrease by 695,000 in Q3 2022 compared to Q2 2022 due to stiff competition from other carriers, and Xfinity added nearly 900,000 new prepaid subscribers over the same period.

What is the source of all these new subscribers? Many analysts predicted that the US telecom industry would experience a sharp slowdown in mobile revenue growth in 2020 as the COVID-19 pandemic finally comes to an end and the economy recovers. While this would be the case in many regions of the world, the US has seen a sharp increase in wireless revenue. This is due to the unusual nature of subscriber switches from prepaid to postpaid subscriptions.

With time, we now understand that there is only one reason postpaid subscribers are needed – to provide mobile broadband access. When a company offers cellular service to its subscribers, they want a way to pay for it and need a phone to use the service. This has been the main growth driver in the US in recent years and accounted for most of the growth in total subscribers. But prepaid subscriber growth has matched or surpassed postpaid growth over this period, reinforcing our view that prepaid subscriptions are an important factor to consider when looking at why not all mobile subscribers are in the same dimensions increase.

The US cell phone market continues to grow thanks to a mix of factors including adoption by new age groups and the resumption of service plan bundling and prepaid vs. postpaid. We expect this sensation to continue in 2018 as wireless carriers continue their efforts to meet consumer needs.

Post-pandemic, many people have been working from home, which has helped boost demand for businesses. While a third of American homes still have only one phone line, the number of homes with two lines is increasing. Overall, business and consumers are the two main drivers of subscriber growth in the US. The former is benefiting from growing demand for data and voice services in the workplace, while consumers are taking advantage of the latest mobile devices with faster connection speeds, allowing them to be extremely productive at home or in the car.

If 2023 is expected to see a sharper contraction in the wireless sector than previous years, it will have a significant impact on service provider and handset maker profits. This is because customer retention rates are impacted both positively and negatively.

The stagnant economy is not only affecting the world of work and supply chains, but will also affect consumer spending. Stagnant wages mean less disposable income can be spent on expensive phones and smartphones due to price cuts by wireless carriers. Additionally, as unemployment rises, households are likely to tighten their belts and save money by reducing spending on luxuries like cell phones. While this may lead to fewer first-time device purchases, it could also lead to greater adoption among older users who are more willing to compromise on the latest automation in exchange for lower prices.

Business unit performance is the other aspect affecting growth. There’s a good chance companies will continue to hire at about the same rate, but as new hires occasionally increase and employment slows, overall hiring will slow.

Depending on the depth of the decline and whether it extends into the first half of 2023, releases could end up in the company’s net flops. The fact that prepaid carriers do not offer fixed services would have a major impact on the development of the entire mobile industry, especially postpaid providers.

H/T: Counterpoint research

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