Yesterday, one of my favorite journalists covering wireless, Mike Dano, published an article with the title “Why Wireless Carriers Magically Keep Growing Every Quarter.”
Dano notes that there’s been a roughly 2.5% growth in wireless subscribers for each of the past several quarters. This growth rate is tricky to make sense of:
They continued: ‘It is all but certain that some customers have taken advantage of these offers even if it means adding a line they don’t need, and won’t use. The customer would simply reassign the new BOGO handset to an existing (used) line, moving an old unwanted handset to the new (unused) line.’
I’m not convinced this is the simplest explanation. A lot of consumers would find the process of adding a line to take advantage of a buy-one-get-one (BOGO) offer then switching service between devices complicated or sketchy. Around 2012, massive phone subsidies on post-paid plans were extremely common. At the time, I was involved in the cell phone resale business. I noticed that a surprising number of people were eligible for subsidized upgrades but not using them. In these scenarios, a subscriber could upgrade to a new ~$400 device for free, switch back to an old device, and quickly resell the new device. Even though the opportunity was relatively simple, I got the impression that people rarely took advantage of it.
The other problem I have with the explanation is that if consumers are taking advantage of BOGO offers in large numbers, carriers ought to notice what’s going on. Perhaps some carriers want to pad their subscriber numbers, but I find it unlikely that there’s an industry-wide willingness to pad subscriber numbers today since that will lead to higher churn in a year or two. I would guess that some carriers seeing consumers regularly add new lines to get free devices would be inclined to promote device-financing options. I expect financing options would often be simpler for consumers and more profitable for carriers.
That said, it’s pretty clear that at least some new lines come from those taking advantage of BOGO offers. A recent FCC filing stated the following (emphasis mine):
What else might explain the large growth in subscriber numbers? On Twitter, industry-analyst Roger Entner mentioned that the growth could be due to subscribers transferring off of the Lifeline subsidization program.
It’s an interesting puzzle, and I might just be missing something. Despite my skepticism, I still don’t think it’s implausible that BOGO promotions really are driving lots of growth in subscriber numbers.
- The filing is available here and archived here. The portion of the filing that I quote comes from page 6 of the PDF.
- I’m interpreting the 1.7 million figure as an estimate of the total number of “fake” lines added in 2018. If that number is actually an estimate of the marginal change in “fake” lines, a lot of what I say in this post should be ignored.