In some ways, a wireless carrier claiming it has the best network has about as much meaning as your local pizza place saying it has "award-winning" wings. It may be true, but it's very hard for customers to determine what that actually means.
On this episode of Industry Focus: Consumer Goods, the team discusses two recent industry reports on wireless network quality in the U.S. While one crowns T-Mobile and Verizon as the best options, the other has surprisingly different results.
For consumers, pricing may be prove to be the key factor.
A full transcript follows the video.
This podcast was recorded on Feb. 24, 2017.
Vincent Shen: I would like to turn our attention to the telecom industry. First, for more of a consumer-facing topic. You mentioned there had been some new reports released regarding the quality of the networks among the big four players --Verizon, AT&T, T-Mobile, and Sprint. Who managed to come out on top?
Daniel Kline: There's two very different reports. There's the OpenSignal report, which is done using actual data from people's cellphones. It's billions of data points. And that report has Verizon and T-Mobile neck-and-neck. Sprint does OK, and AT&T is at the bottom. It's worth noting that even with all those differences, it's kind of one in 1A, 2A, and 2B. And everybody is grouped pretty closely.
The second report is the RootMetrics report, and that's the one, do you remember the Verizon commercial with all the balls where it showed how they won in every area, Verizon dominates in this report. This is a report where they effectively drive around and do testing. Both companies argue that their methodology is correct. T-Mobile takes huge issues with the RootMetrics report every year. But Verizon wins dramatically. T-Mobile is about the same as they were a year ago. AT&T is number two in that report, Sprint is number three, but even RootMetrics more or less says, "For most people, all of these are good enough." It's kind of the message that Sprint is delivering in its commercials with the old Verizon guy, Paul --
Shen: "Can you hear me now?"
Kline: Yeah, the "Can you hear me now?" guy. It's basically this idea that, are you going to pay Verizon to be a little bit better? They say 1% better. They might be more than 1% better. But for the average person who doesn't travel a ton, Verizon could be bad in their house and Sprint could be great, and that could be the small difference. So for most people, it's actually worth trying T-Mobile or Sprint, which are the cheaper options, and seeing if they work with your lifestyle. Because for the vast majority of us, every network is good enough.
Shen: I think that definitely applies, as well if you live in a major metropolitan area, or a larger metropolitan area --
Kline: And T-Mobile, which is tied in the OpenSignal and clearly number four in the RootMetrics report, even RootMetrics acknowledges that they are very strong in urban areas. I use T-Mobile. We have talked about this. I live in West Palm Beach. I come here all the time. I have family in Connecticut and Massachusetts. The only place I have problems with it is, we have a family home in rural New Hampshire, and in the actual town, I can't get service, and it's very clear on the T-Mobile map that there is no service. They have Wi-Fi calling, it's not a super big deal. So for most people, it's hard to imagine that it's worth paying significantly more money for Verizon or AT&T.
Daniel Kline has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.