HAMPTON, N.H. — Mobile carriers are struggling to generate wireless service revenue growth in the U.S. due to the ongoing pricing war and the saturating smartphone market. To offset declining service revenue, operators are focused on expanding their connected device offerings and increasing equipment revenue through unsubsidized device purchases, according to TBR’s 2Q15 U.S. & Canada Mobile Operator Benchmark.

“Verizon remained the top-ranked U.S. wireless carrier in 2Q15 and led the industry in postpaid subscriber growth and profitability in the quarter,” said TBR Research Analyst Steve Vachon.

“Verizon is leveraging its LTE network to create revenue streams, such as IoT solutions and the Go90 mobile video service. Verizon’s growing portfolio creates an ecosystem that retains subscribers without relying on aggressive pricing tactics. AT&T is focused on retaining high-value smartphone customers and steering these customers toward connected devices. AT&T led the industry in connected device additions in 2Q15 due to the carrier’s success in segments such as connected car and Digital Life.”

T-Mobile and Sprint remained the predominant aggressors in the wireless pricing war in 2Q15, whereas Verizon and AT&T are placing greater emphasis on their network quality and growing connected device portfolios to attract subscribers. T-Mobile garnered the highest postpaid phone net additions in 2Q15, contributing to the company being the only Tier 1 U.S. carrier to report year-to-year service and equipment revenue growth in the quarter.

T-Mobile rivals struggle with service revenue

Conversely, T-Mobile’s competitors are struggling to increase service revenue, as they have not been able to generate sufficient subscriber growth to offset the impact of offering discounted service plans. To compensate for lower service revenue, carriers are increasing equipment revenue by migrating customers to equipment installment plans (EIPs) and device leasing programs.

Combined wireless capex among Tier 1 U.S. operators increased 3.9% year-to-year to $8.6 billion in 2Q15 as Sprint, T-Mobile and Verizon increased spending in the quarter to expand and densify their LTE networks. Sprint and T-Mobile are in the final stages of their initial LTE deployments and both carriers will extend their LTE networks to reach approximately 300 million POPs by the end of 2015, which will narrow the gap in LTE coverage among U.S. carriers.

To improve network capacity, U.S. and Canadian carriers are focused on acquiring additional spectrum licenses and deploying small cells and distributed antenna systems (DAS) to ensure their networks can support rising subscriber data usage.