External Factors

Topics: Mobile phone, Verizon Wireless, 4G Pages: 9 (3176 words) Published: April 11, 2013
External Assessment
The cellular industry is a very competitive industry when it comes to market share. The industry has 4 major national players holding 90% of the market share. The chart below shows the US market share by carrier and how much ground the smaller carriers have to make up. The chart also shows an acquisition that was declined by the FCC, as it would have given AT&T 43.3% of the total wireless market share.(Dailywireless.org) The FCC heavily regulates any mergers in the cellular industry, as you can see with a few mergers we could easily get into a situation where the open market would be compromised and potential monopolies could form. Although the easiest way for carriers to gain large portions of the market share is through acquisitions, they can also do it by good old-fashioned customer growth. z

Adding new customers, while retaining old customers is essential for wireless carriers. Net additions are a term that cellular providers will often discuss in their financials. Net additions= New Customer Additions- Customer churn (cancellations). In the wireless industry you must gain and retain customers to stay competitive. If you are good at one and not the other you will not be able to keep up with the fast pace industry. In the chart below you can see that Sprint who was one of the early innovators of mobility and data on their devices, is having trouble adding customers and certainly not retaining their current customers. To be a player in the wireless industry there are many factors that will help you gain market share, customer growth is just the start.

When competitors are looking for a way to be competitive in the industry there are many factors that will contribute to a companies success. We have identified in a CPM matrix some current trends in the market for the top 2 competitors in the industry along with US Cellular have to focus on in order to achieve the ultimate customer growth, and market share. The CPM shows US Cellular lacking in most areas, therefor supporting where they stand competitively with Verizon and AT&T. The CPM will give an understanding to what US Cellular will need to focus on in their alternative strategy.

VerizonAT&TUS Cellular
Critical Success FactorsWeightRatingScoreWeightRatingScoreWeightRatingScore

Market Share0.2030.600.3041.200.3010.3
Net Additions0.2040.800.1540.600.3010.3
4G Data Service0.2030.600.2020.400.1530.45
Customer Loyalty0.1040.400.1020.200.0530.15
Competitive Pricing0.1030.300.0520.100.0540.2

Social trends are affecting wireless carriers revenues in a big way. The biggest trend in socially was the adoption of wireless data. People began adopting wireless data around 2002, and even at that time it was mainly used in business. Blackberry was the major player in the early 2000’s allowing email and Internet access on the go. As a culture people began to figure out that these devices not only helped keep business affairs straight, but they also could help keep hectic personal lives in order. The blackberry was no longer for the man in the suit heading to a board meeting. Soccer moms began to schedule all their drop offs and pick-ups on their blackberry. That was a big swing for wireless carriers as it shifted their focus on making revenue from text messaging and minutes, to making money off of data connections. From June-02 to June-12 wireless data revenues in the cellular industry increased from 727 million dollars to 63.3 billion dollars. Another important factor in the spike of wireless data was the amount of people that had cell phones, and specifically the amount of people purchasing smart phones. As of June 2012 the wireless penetration rate is 101% meaning that the number of...

Bibliography: http://www.dailywireless.org/2012/03/23/u-s-cellular-goes-lte/
FCC 15th Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html (EBITDA Multiples)
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