The UK has five networks at present, serving a population of around 61 million. It will have only four with the merger of Orange and T-Mobile next year, and further network consolidation is possible too.
By contrast, the US has a population of 305 million people and around 75 network operators across its 50 states.
Mobile penetration in the UK runs at something like 120 per cent, with many citizens taking several airtime connections. In the fragmented US, market penetration is around 85 per cent (260 million people).
Because of the sheer size of the US, and the need for competition to establish network coverage more quickly, the Federal Communications Commission issued regional mobile network licences – the first generation was granted in 1982, the second generation in 1991, and the third generation in 2000.
Ovum analyst Steven Hartley says: “Network operators have massive gaps in coverage and can only claim national coverage by striking roaming deals with others, or by buying up regional competitors.
“It’s why the US market has always been perceived to be some way behind Europe – the mass of network operators has been busy consolidating, rather than pushing the boundaries. But the US resembles any other well-developed mobile market now; it’s just taken longer to do so.”
There are four national carriers in the US. Verizon Wireless takes a 32 per cent share with 87.5 million subscribers, AT&T takes 29 per cent with 79.5 million subscribers, Sprint Nextel has 18 per cent with 48.8 million and T-Mobile has 12 per cent with 33.5 million on its books.
Each tends towards a particular regional heartland, dictated loosely by its headquarters: Verizon is based in New Jersey, AT&T in Dallas, Sprint in Kansas and T-Mobile in Washington state.
Combined, the four own 91 per cent of the market and are increasingly looking to buy up small regional fry, either to rebrand them completely or run them as sub-brands in the sticks.
There are only three other operators in the US with more than one million subscribers – US Cellular with six million, Metro PCS with six million and Leap Wireless with 4.5 million.
All are expected to be purchased in the near future. “There are loads of tin pot companies – very small, very localised. Ultimately the market really boils down to the big four. The rest are almost irrelevant,” explains Hartley.
Another issue faced by US operators is signal coverage. Verizon, AT&T, Sprint and T-Mobile claim 99 per cent population coverage, but because the population is concentrated along the coasts mainly, there are large swathes of the country that do not get a ready signal from certain network operators.
Consequently, the US has emerged as a major market for femtocells. Consumers and businesses are deploying them as personal network masts to boost coverage blackspots.
Global Insight analyst Seth Wallis-Jones says: “Coverage is still a serious issue. Many areas don’t have any signal at all. It’s the prime reason femtocells are picking up in the US more than anywhere else – the investment to cover all the US is too great.”
Full report in Mobile News issue 450 (October 19, 2009).
To subscribe to Mobile News click here