US Mobile Subscriber Numbers Are Looking A Little Too Good
By Mike Masnick, Wed May 18 19:15:00 GMT 2005

It's beginning to look like an epidemic. Following admissions in Australia and South Africa that operators were lying about subscriber numbers, it looks like some are suspecting a similar fudging in the US.

Around the world stories have been popping up about mobile operators purposely exaggerating their subscriber counts. There were stories in South Africa and Australia showing how operators were using obviously dead prepaid accounts to boost their subscriber numbers. Sometimes, of course, it's difficult to tell if a prepaid account is really "dead," but it seemed like the operators were erring on the side of ridiculous in order to make their own numbers look much better.

Through all of this, though, people pointed out that it would be much tougher to do the same thing in the US, where prepaid service was much less popular (outside of some MVNO offerings). However, with the recent growth in US subscriber numbers, some analysts are starting to scratch their collective heads and whisper that these numbers don't look legit. It's not necessarily clear how the numbers are being fudged, but the problem is that US subscriber growth is not matching the patterns found in other countries.

Usually when countries reach about 70% saturation, the growth rate begins to slow. It doesn't stop, but it levels off. However, recent US numbers showed no such slowdown, as operators sped right through the saturation mile marker.

There could be some legitimate explanations for this continued growth. Newer plans (such as family plans) and increased competition in terms of rates and services could be driving increased demand. Also, the fact that the US has been something of a laggard in mobile service could account for this. Over the past few years, the US has closed at least some of the gap in mobile services, and the lessons US operators are learning from overseas operators could account for strategies that have allowed growth to continue. There definitely have been efforts under way to get around the saturation hurdle elsewhere -- and it's possible that US operators have picked up on that.

However, if that's the case, it's been done very quietly. There hasn't been much evidence at all that operators are employing many of these strategies. While there still isn't much proof, the ongoing infatuation from Wall Street with subscriber numbers and the lack of serious penalties for inflating those numbers must make the incentives all too easy for some operators to come up with methods to show a higher than accurate subscriber count. As with the other overcount stories, it's important to keep these inflated numbers in mind when looking at the overall market size of mobile data services. If there really aren't as many subscribers, many of these market predictions are likely to be overinflated as well.