MetroPCS Launches LTE, but Speed Is Not the Focus

Event Summary

September 21, 2010 - MetroPCS launched the first U.S. LTE-based service in Las Vegas, Nevada. Customers may select from two LTE-specific plans at $55 and $60 per month that offers talk, text and Web in addition to other service features. The $60 plan includes MetroSTUDIO, an entertainment and personalization source to purchase ringtones, ringback tones and over-the-air, DRM-free music (ranging from $0.79 to $1.29 per track). On-demand streaming video content is also available. To make use of LTE, the Samsung Craft, the first commercially available LTE smartphone with touch and QWERTY input, is available for $299 after rebate.

Quick Take

Analytical Summary

• Current Perspective: Positive on MetroPCS’ launch of LTE-based services, because unlike other 4G hype about competitive speed advantages over 3G, it plays a conservative card and talks more about the ability to bring better Web experience and entertainment to users who had been relegated to a 1xRTT (read slower) data experience. MetroSTUDIO, the collaboration with Real Networks, provides customers the outlet to consume on-demand video, in addition to the ability to buy DRM-free music over-the-air (or via WiFi). Yet, with price points at $55/$60 per month coupled with a $300 device, it remains to be seen whether this will be a niche product within MetroPCS’ customer base.

• Vendor Importance: Very high to MetroPCS, as the company leverages new LTE technology to deliver entertainment services and faster Web access speeds to its customers and ultimately tries to help lift ARPU. In addition to attaining bragging rights to be the first U.S. carrier to offer commercial LTE-based services ahead of Verizon Wireless. Additionally, MetroPCS’ introduction of an LTE smartphone counters the conventional talk that LTE devices will be broadband modems first rather than handsets.

• Market Impact: Moderate on the wireless services segment, because entertainment services in the prepaid sector will slowly emerge as a differentiating feature. It is unclear whether a price-sensitive prepaid demographic will eagerly opt in where postpaid audiences have been slow to adopt. MetroPCS’ limited LTE footprint extends its regional and ‘island’ nature of service since LTE roaming is many years off. While this sits well with the core of the demographic that stays put within its home market, it will be difficult to court postpaid users or prepaid users who want national flexibility.

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Competitive Positives and Concerns

Response & Recommendations

Analytical Perspective

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