Wireless carriers are always claiming they've got the best, the fastest, or the newest network, but a recent RootMetrics report gives a detailed account of which U.S. carrier has the best overall network. And for the first half of this year, Verizon Communications' (NYSE:VZ) mobile service came out on top.
Here's how Verizon scored on overall performance compared to other carriers in the U.S.:
This is the second time in a row Verizon's come out on top for overall performance, and the carrier's also outperforming the competition in nearly every category. Verizon took the top spot in reliability, speed, data performance, and call performance, losing to AT&T (NYSE:T) in text performance.
Widening the spectrum
Part of Verizon's strength comes in part from its XLTE network. XLTE is the name for Verizon's AWS, or Advanced Wireless Service, spectrum. Verizon noted in a recent press release that:
"XLTE Ready devices automatically access both 700 MHz spectrum and the AWS spectrum in XLTE cities. Customers with 4G LTE devices operating solely on the 700 MHz spectrum in XLTE markets also benefit from the extra capacity created by XLTE Ready device traffic moving to the AWS spectrum."
That may sound a bit confusing, but it basically means this AWS spectrum (which Verizon calls XLTE) frees up more bandwidth for customers and can result in faster connection speeds. Verizon claims XLTE has double the 4G LTE bandwidth and greater peak speeds. The company's expanded XLTE across the U.S., and it now covers four out of every five Verizon Wireless markets. Nearly all of the new devices Verizon sells are XLTE compatible, and currently 35% of devices on Verizon's network can tap into the AWS spectrum.
RootMetrics says, "Perhaps in part due to its rollout of AWS spectrum as part of its XLTE offering, Verizon appears to be getting faster and offered consumers the best speeds at the national level."
And the result of the faster network has been great for Verizon's business.
For the most part, Verizon's wireless subscriber net additions have been strong, thanks (at least in part) to its robust network. The chart below shows Verizon's subscriber growth slowly, but steadily growing over the past couple of years.
In Q2 2014, Verizon Wireless added 1.4 million net additions. About 1.15 million of those were tablet subscribers, and just 304,000 were cell phone subscribers. The company's strong subscribers numbers have lead to steady revenue growth between 5%-8% each quarter since the beginning of 2013.
The problem with being one of the top carrier's in the U.S. is that subscriber growth isn't going to be as high as smaller carriers, which means Verizon needs to stay focused on retaining the customers it already has -- and the carrier's done a great job of that so far. Verizon's churn rate -- the percentage of customers the company loses -- was just 0.94% for postpaid subscribers in Q2.
And this is why Verizon's new XLTE push could be so important. The carrier needs to continue adding value for its customers in order to keep its churn rate low, especially because AT&T is nearly matching Verizon in almost every network performance category.
It's possible AT&T could leapfrog Verizon's network in the next RootMetrics survey for the second half of 2014, but that shouldn't have much of an impact on Verizon's business. With the company's robust network growing even stronger, and churn rates already low, Verizon investors shouldn't see any major dips in business performance if AT&T comes out on top. But gaining new subscribers requires a strong network and good marketing -- and keeping the top spot for overall performance would certainly help with the latter.
Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.