U.S. Cellular VoLTE plans include a launch in one market this year, following trials in three markets, said U.S. Cellular CEO Kenneth R. Meyers late yesterday. Eventually the company expects to expand VoLTE more broadly, said Meyers in a question and answer session at the Citi 2016 Internet, Media and Telecommunications Conference in Las Vegas, which was also webcast.
U.S. Cellular VoLTE
U.S. Cellular sees VoLTE as a means of increasing its roaming revenue. Currently the company can only provide roaming for carriers using CDMA for voice service, which limits the number of carriers for whom it can offer roaming, Meyers explained.
As for U.S. Cellular VoLTE deployment plans, Meyers said, “Part of our strategy is to take multiple years to… ride down the cost curve.” Spreading a project over multiple years also enables the company to keep a consistent work force, he noted.
That approach is “how we’re thinking about VoLTE,” Meyers said.
Wireless Competition
U.S. Cellular now finds itself in a unique position in an increasingly consolidated wireless market. The latest annual FCC wireless competition report referenced the company as the only “multi-regional” wireless carrier in the U.S. today – between the top four carriers that control 98.5% of the market and hundreds of smaller carriers that share the remaining 1.5% with U.S. Cellular.
Asked how U.S. Cellular differentiates itself, Meyers said “We operate on a network quality foundation,” also noting that the company has broader geographic coverage within a region than some other carriers. He pointed to the company’s 850 MHz spectrum as a key advantage, adding that in any market only one other carrier can have the same license, which would enable that carrier to “replicate [U.S. Cellular] quality at a reasonable price.”
In most cases, U.S. Cellular’s strongest competitor – i.e., the one with the other 850 MHz license — is either AT&T or, more often, Verizon, Meyers said.
That means U.S. Cellular doesn’t have to respond to every new pricing promotion offered by T-Mobile and Sprint, Meyers said. But if AT&T or Verizon feels compelled to respond to T-Mobile or Sprint, then U.S. Cellular may have to do so as well, he said.
Margin Goals
A key goal for U.S. Cellular is to get its margins into the mid-20 percent range, but Meyers declined to forecast when that might occur, noting that it would depend what happens with roaming revenues and with the competitive landscape.
Some of the company’s tactics for 2016 will include working with handset suppliers to get customers to upgrade and emphasizing accessory sales. Meyers noted that in the past a typical accessory sale was a $50 battery, but today it’s not uncommon for a customer to spend $200 on accessories, which have a strong margin, he said.
U.S. Cellular might participate in the 600 MHz broadcast spectrum auction, Meyers said. The company wants to have low- and mid-band spectrum in all of its markets so that it can efficiently provide range and capacity. Accordingly the company would be most interested in gaining 600 MHz spectrum in markets where it currently lacks low-band spectrum, said Meyers.
