Statement of Purpose

This study will provide information that will familiarize the researcher with the wireless communication service providers in the United States. It will give a detailed account of the services the mobile operators have, how they have developed over the years and the how they are different from other companies in the industry. In order to do this it will mainly focus on four of the major players in the industry namely; Verizon Wireless, AT&T Wireless, Sprint/Nextel and T-Mobile. The cellular industry in the United States seems to be heading towards a future where the customers have a wider range of choices in terms of mobile devices. The mobile telephone service industry in the United States has grown at an incredible rate to reach 285 million subscribers up from 92000 in 1984. This underscores the growing importance of mobile telephone usage as part of our day-to-day lives. The mobile phone service is in of the most unstable market that exists today across the world. This paper wishes to create an understanding of the wireless communication services that are provided by the leading mobile phone operators and how these services have evolved over the years, expanding and improving. This will provide an insight into what sets these companies' service from those of others operating within the United States as well as in other countries. It will also give light to the type of services given by the individual provider and show how these companies work to get their customers and effectively carter to their customer base.

Industry analysis of mobile telephone companies in the United States

Mobile phones are now a fundamental part of personal communication in the United States as well as across the globe. However, consumer research carried out over the years have devoted limited specific attention of the choice and the motive that underline the mobile service provider selection when one acquires a phone especially in the united states.  There are numerous factors that need to be considered when differentiating the various types of services a customer signs on, once they enter into a partnership with the mobile operator. The need to appeal to more subscribers has over the years driven these operators to adopt the most advanced systems in the market, in order to provide the customers with the best service possible. The macro and microeconomic conditions that are present in the mobile phone industry has driven the evolution of this industry making it one of the most competitive in the market. As such, companies have aimed at offering services that differentiate themselves from others while still remaining relevant to target market, efficient and cost sensitive so as to remain competitive (Schwatz, 2005, p. 3).

Background to the information

The United States supports around 153 million personal communication service (PCS) and cellular service subscribers. With a 290 million population, the country covers of the second largest market for mobile phones in the world. The difference between PCS telephone service and cellular telephone service is that the cellular telephone utilizes the 800 MHz frequency band while the PCS is on the 1900MHz. Cellular network began operating in the country in the 1980's with two companies being licensed in each market place by the FCC. One of the two was affiliated with a landline telephone company with the other having no affiliation whatsoever. By 1995 FCC was auctioning the license for the 1900MHZ frequency range. This was so as to create a playing ground that was more competitive. This managed to transform the US market from only two network operators to seven (Gow & Smith, 2006, p. 13).

Changes were then made to the plans of federal government in 2000 with regard to the cellular market. Plans to auction the spectrum which was being used by the Department of Defense at that time were postponed for a period of three years in September of the same year, 2000.  Before this happened, the FCC had rules that the fixed wireless companies were not under any obligation to give up the frequency spectrum given to them in order to accommodate the high-speed mobile services. The FCC reversed this ruling the same year in November which eliminated the limitations placed in the amount of frequency that an operator could have (Gow & Smith, 2006, p. 15).

In order to meet the rising competition in the now crowded cellular market, companies began to offer a variety of contents in their areas of service provision. Verizon Wireless, a joint venture of Vodafone Group Plc, and Verizon Communications, was offering services that were based in Code Division Multiple Access (CDMA). It claimed that its users would be able to experience as a result of this technology considerable growth in speeds of up to an average of 40kbits/second-60kbit/second. In 2001, AT&T Wireless deployed GPRS, General Packet Radio Service, in 40% of its mobile network with plans to offer the service across the nation by the end of 2002. It went ahead to deploy EDGE, Enhanced Data Rates for GSM Evolution, by the end of 2002 country wide. The company was able to achieve this feature through software upgrades. By 2003, AT&T was already implementing its Wideband Coded Division Multiple Access (WCDMA) completing its deployment in 2004. At this time however, the company could only roll out this service to only 80% of its total market. Cingular Wireless initiated a strategic plan to introduce EDGE and GPRS by 2004. GPRS enabled users to initially get data speeds of 40kbits/second but was geared to provide data speeds of up to 177kbits/second once fully integrated into the system. EDGE technology offered high speeds at 470kbits/second. However, the customers were only able to get 100kbits/second on average.  Cingular Wireless was a joint venture of SBC Communications Inc and BellSouth Corp (Gow & Smith, 2006, p. 17).

The United States is not the largest telecoms market worldwide when measured by the mobile-phone user's numbers, but it has managed to be one of the most sophisticated one in terms of technological advancements. Market trends in the country are often later repeated around the world. The infiltration of mobile-phone ownership is on the higher side with every four out of five people already owning a mobile phone. By 2011, the mobile industry will break through the basis of per capita, which is expected to exceed 95%. The four main carriers in the United States mobile market is Verizon Wireless, AT&T, Sprint and T-mobile. Because of the high ownership rates, these companies are currently focusing on manners in which they squeeze more revenue from the cell-phone users by having exclusive contracts with makers of popular handsets, or forming other lucrative offers. They have also invested heavily in new technologies such as Worldwide interoperability for Microwave Access (WiMAX) and Long Term Evolution (LTE), which enable downloads at high speed on mobile phones and as such cab generate more revenues by enabling their users to download music, movies and much more.

WiMAX is a wireless broadband technology that is IP based and provides performance that is similar to 802.11/Wi-Fi networks with QOS (quality of service) and coverage of cellular networks. It can provide (BWA) broadband wireless access over a distance of 3 - 10 miles for mobile stations and 30 miles for fixed stations. In addition, WiMAX also supports WiFi- like data rates although the interference issue is lessened. It can also operate in both non-licensed and licensed frequencies providing a viable economic model and regulated environment for wireless carriers. Similarly LTE the migration of Internet applications from fixed to mobile networks. Some of these applications include video streaming, mobile TV, Voice over IP, music downloading and many others. WimaThe smaller, independent mobile phone companies are inevitably losing market share because they lack the resources to build their own technologies. This is leading to further consolidation in the industry (Floyd, 2001, p.36).

Sales in mobile phones were expected to fall in 2009 but smart phones released the same year were able to break this trend, registering both value and volume growth. Smart-phones are mobile phones that have advanced features such as internet facilities, e-mail and a full keyboard. They also have large memories and powerful processors. Smart-phones are pushed to surpass laptop computers in their popularity and could account for 20% of the overall market in a few years (Bautsch, et al. 2001).

In 2010, the US mobile market was still dominated by AT&T Wireless, Verizon Wireless and Sprint Nextel. This represent 74% of the market share down from 2009s 78%. T-Mobile is the fourth largest with around 12%. The deployment of 3G networks has underpinned mobile broadband. This is expected to experience a greater stimulus in the growth of mobile broadband with the deployment of 4G networks across the country, according to trends, this will imminently happen. Verizon Wireless and Sprint Nextel dominate in 3G networks with their CDMA2000 technologies. Their subscriber numbers far outstrip those on the AT&T Wireless's WCDMA technology. However AT&T Wireless launched it HSDPA enhancements which has enabled it to close the gap significantly with its HSDPA 7.2 (3G) launch, moreover, the HSDPA + deployments made by  AT&T Wireless in 2009/2010 has positioned it service as the fastest in the market in terms of broadband services. The next battle that is looming amongst the mobile phone providers is in 4G technology. Sprint Nextel is offering the WiMAX service on the clear network to almost 85% of the largest markets in the US, while carriers such as AT&T and Verizon Wireless are moving towards launching the LTE technology, mobile data is currently accounting for an increased share of these companies' revenue and will continuously do so as mobile TV and mobile broadband services gather momentum (Plunkett, 2008, p.7).

The telecommunication sector in the United States has witnessed significant strengthened over the years. There was Verizon's acquisition of Microwave Communication Inc (MCI). Also there has been the acquisition of AT&T Corp, by SBC Corporation rebranding it to AT&T Inc., finally AT&T then acquired BellSouth.  These mergers have been largely in response to an increase in competition from new communication technologies that have continuously eroded the revenues from fixed-line telephone services; competition from data and wireless voice providers such as Sprint Nextel continues to increase as growth continues to be experienced in wireless usage. In recent years, VoIP (Voice over Internet Protocol) has become a major competitor, being offered by providers such as Skype and Vonage and by the cable MSOs. With VoIP technology, you can make voice calls with a broadband internet connection instead of the analog phone line. While some VoIP services may restrict you to only calling people using the same service, there are some that may allow you to communicate with anyone with a telephone number regardless of his service: mobile, local, long distance and international numbers.

The mobile phone companies are responding by merging as well as through the development of the fiber optic deeper into their networks so as to offer a "triple play" bundle with voice services, broadband and TV. More recently, companies have appeared to focus more of their resources on their mobile businesses, largely on the 3G and 4G upgrades with their mobile services.  Over the years there has been a decline in ARPU (Average Revenue Per User) for the voice service. ARPU is a very powerful indicator of how a telecommunication company is accessing the revenue potential of its customers. It is calculated by dividing the total amount of revenue the company accrues by the total number of users from whom the revenue came from. This is however expected to be offset by an increase in data ARPU. This has seen the data revenue from mobile users to increase by around 30% for the year 2009 which is expected to increasingly grow at this high rate from 2010 through to 2015. This trend is seen for the first time in 2009 that the data traffic exceeded the mobile voice traffic. The cumulative annual growth rates in mobile data traffic are expected to be over 100% between 2010 and 2015 (Plunkett, 2008).

Verizon Wireless, AT&T Wireless and other mobile phone companies have chosen to build their future 4G networks on the Long Term Evolution Technology with Sprint/Nextel choosing instead to migrate to the WiMAX standard. The new LTE technology will allow for interchangeable with most of the other mobile phone carriers. It will also allow any unlocked LTE phone to function on any companies' network. LTE is an upgrade from the HSPA & 3G/WCDMA for many companies on the GSM technology curve.  This is a radio access technology that is optimized to deliver very fast data rates, with peak rates at 100Mbits/second on the downlink and an uplink of 50Mbits/second. LTE is designed to be backwards-compatible with HSPA and GSM incorporating Multiple in Multiple Out (MIMO) combined with single Carrier FDMA in the uplink and Orthogonal Frequency Division Multiple Access (OFDMA) in the downlink (Plunkett, 2008, p. 5).