T-Mobile says Verizon and AT&T's unlimited data plans are killing their network speeds (TMUS)

US Wireless Movement

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Verizon's and AT&T’s reactive moves to expand unlimited data plans may be stifling their network speeds, according to T-Mobile CTO Neville Ray.

A nosedive in megabytes per second (Mbps) for the two companies during Q2 2017, coinciding with the launch of their new unlimited offerings, could suggest that the two networks were strained by the sudden uptick in data consumption.

It was only after the first full quarter since offering an unlimited plan that Verizon plummeted to third place, behind AT&T on network speed. Meanwhile, T-Mobile’s network ranks first in download speed and LTE availability in the US, Ray said, referring to Ookla data. In Q2 2017, the carrier reached average speeds of 27 Mbps. The success of T-Mobile’s strategy signifies how smaller companies can fly past competitors and swiftly disrupt markets, specifically the US carrier model.

As smartphone and tablet adoption in the US approaches saturation, carriers have begun fighting over the same subscriber base. T-Mobile's disruptive, yet appealing, unlimited offerings have continued to eat into the customer base of rival carriers Verizon and AT&T. In Q1 2017, T-Mobile added 1.1 million customers, and Verizon had a net decline of 307,000 wireless postpaid connections.

Verizon’s move to offer its unlimited plan in February is a reversal for the company, which initially saw little value in it as the company discontinued its first unlimited plan back in 2011. However, as the carrier continued to hemorrhage subscribers, its losses turned out to be not as bad as expected. In Q1 2017, Verizon had a net loss of 289,000 postpaid phone customers, but said it was on pace to lose nearly 400,000 of those users before its unlimited plan launch.

Still, while retaining customers is important for Verizon and AT&T, their focus has moved to new growth drivers, like the Internet of Things (IoT) and video delivery. Both Verizon and AT&T are building out LTE Cat-M1 networks across the globe, which would be useful for a set of IoT use cases. Verizon’s interest in a 5G wireless network rollout will also work to support various IoT applications that rely on massive amounts of data. And AT&T is focused on video delivery services, like its new DirecTV Now streaming offering, to lure subscribers.

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