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

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


T-Mobile and AT&T are the greatest winners in the smartphone subscriber growth in the US, adding more than 8 hundred thousand to 7 hundred thousand postpaid phone users respectively. Meanwhile, Verizon saw its Q3 2022 phone subscriber base decrease by 695,000 from Q2 2022 due to heavy competition from other carriers and Xfinity gaining almost 900,000 new prepaid subscribers in the same period.

What is the source of all these new subscribers? Many analysts predicted that the U.S. telecom industry would experience steep drops in mobile revenue growth in 2020 as the COVID-19 pandemic comes to an end definitively and the economy recovers. Even if this were the case in many regions of the world, the US has seen a sharp rise in mobile revenue growth. This is due to the unusual nature of subscriber transfers from prepaid to postpaid subscriptions.

With time, we now understand that there is only one reason why postpaid subscribers are needed—to provide mobile broadband access. If a company offers a mobile service to its subscribers, they will want a way to pay for it and need a phone to use the service. This has been the primary growth driver in recent years in the US, accounting for most-of-the growth in total subscribers. But, prepaid subscriber growth has matched or exceeded postpaid growth over this period, reinforcing our point that prepaid subscriptions are an important factor to consider when looking at why all mobile subscribers are not increasing at the same rate.

The U.S. mobile phone market continues to grow thanks to a mix of factors, including the adoption by new age groups and the resumed bundling of service programs and prepaid vs postpaid. We expect this sensation to continue in 2018 as wireless providers continue their efforts at meeting consumer needs.

Following the pandemic, many people have been working at home, and this has helped boost the demand for business lines. While a third of American households still have only one phone line, the number of households owning two lines is on the rise. Overall, business and consumers are the two main drivers of U.S. subscriber growth. The former is profiting from growth in demand for data and voice services at work, while consumers are taking advantage of the latest mobile devices with faster connection speeds that enable them to be extremely productive at home or in their cars.

If a decline in the mobile sector is anticipated to be more severe than in prior years in 2023, then it will have a significant impact on both service provider and handset manufacturer earnings. This is because customer retention rates are affected both positively and negatively.

The stagnant economy is not just affecting the world of work and supply chains, but will also have an impact on consumer spending. Stagnant wages mean that there is less disposable income to be spent on expensive phones and smartphones as a result of price cuts by carriers. In addition, as unemployment rises, households are likely to tighten their belts and save money by reducing spending on luxuries such as mobile phones. While this may lead to fewer first-time device purchases, it could also result in increased penetration among older users who are better ready to compromise on the latest automation in exchange for lower prices.

The performance of the firm units is the different aspect influencing growth. There exists a good chance that companies will continue to hire at around the same rate, but as more occasional fresh hires are made, and employment slows, hiring will slow down overall.

Depending on how severe the contraction is and if it extends into H1 2023, releases may end up in the company’s net flops. The fact that prepaid carriers do not provide firm services would have a great impact on the development of the mobile industry as a whole, specifically postpaid providers.

H/T: Counter Point Research

Read next: The list of top ten best brands globally has been released



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Mohamed Elarby

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