My reaction when someone asks me about CellBreaker's competition is somewhat rehearsed, somewhat unhinged.
...not rehearsed because I choreographed my answer, but because I know the unambiguity of the answer so well--and get asked the question so often.
...and not unhinged because I'm crazy (although I might be), but because it's sort of like a 12-year-old kid, when a girl holds his hand for the first time, in that, this "I thought you'd never ask" kind of thrill hits me when I get to explain why CellBreaker is poised for greatness.
Let me grab my tutu, my lace on my ballet boots, squat into a plié, and I'll tell you.
The Business of Wireless Switches
Wireless switches are big business nowadays, and this article by top industry analyst, William Ho, does a good job of outlining why.
It fails to mention, though, that the switch leaders have already begun to flag, leaving a large slice of the market primed but un-served.
That's where CellBreaker can grow fast.
The Only Switch Marketplace
CellBreaker is the only switch marketplace that can actually get people out of contracts--not by "paying ETFs off," insofar as that's even a thing, but by actually beating them. With the recent launch of CellBreaker's switch marketplace, the magnitude of the CellBreaker opportunity is becoming more apparent.
Brief History of the US Wireless Switch War
T-Mobile began purporting to pay off early termination fees in January 2014--even though they never actually paid off early termination fees. What actually happened involved a 9-iron, a rebate, a water buffalo, and some ice cubes, and it attracted the ire of the attorney general of Washington State, who sued T-Mobile for false advertisement in its "We'll pay your family's early termination fees" campaign.
Anyway, I digress. Sprint and AT&T soon chimed in as well, launching dubious ETF-buyout campaigns of their own by the end of Q1 2014. What this created was a fierce war, not of price, but of cost to acquire a customer. How much could a T-Mobile, a Sprint, or an AT&T really afford to spend to acquire a customer who might yield $50-85/month in gross revenue?
Economics of Switches
One thing has been clear: no one can afford to sustainably pay off early termination fees. The carriers have been overpaying to acquire customers for fear of losing precious market share, which, put another way, is also fear of losing customers who despise them, anyway. "God forbid that customers who hate us figure out how to leave us."
Anyway, 2014 was a record year in the wireless industry. T-Mobile, who led the ETF-buyout charge grew faster than it ever had in history, but it did so by hemorrhaging cash. Deutsche Telekom, T-Mobile's parent company, even tried to sell T-Mobile twice but failed both times. Deutsche Telekom CFO has been particularly critical of the economics of T-Mobile's ETF-buyout model:
T-Mobile’s runaway growth is not sustainable, which may be why DT has consistently entertained ideas about selling T-Mobile...The question is always the economics in the long term…and earning appropriate money. You have to earn your money back at one point in time.
T-Mobile's financial projections at the end of 2014 were a mix of celebration and sobriety. The company lauded its record growth on the back of its ETF-buyout strategy. Then it said that it can't afford to maintain that growth in 2015. Whereas T-Mobile added about 4 million net postpaid subscribers in 2014, it was projecting only 2.2 million in 2015, revealing not only a slump in growth but the reason why: in essence, they said that they can't afford to continue to pay off ETFs.
That means that T-Mobile alone is leaving about 2 million folks unserved in 2015.
CellBreaker's Growth Opportunity
How many of those could CellBreaker reach? The answer is a matter of CellBreaker's own brand awareness and growth.
T-Mobile and its competitor carriers have done a fine job validating that US consumers care about and are willing to pay for solutions to unwanted contracts (they spent those marketing dollars so we don't have to).
When the dust settles this year, and all of the carriers are short on cash, how important will CellBreaker's switch marketplace be? Will consumers find out about CellBreaker and sign up? Will one of the Big Four carriers try to buy CellBreaker so they can continue to afford to attack ETFs? We'll see.
As for now, though, CellBrealker's new marketplace is growing like crazy.
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