- Wireless is a fully saturated industry, yet total industry growth consistently surpasses population growth
- Analyst Craig Moffett took a closer look at the impact of gig workers driving some of this growth
- And by driving, we mean literally – he looked at Uber, Lyft and others who use second and third phones
It’s a question that has baffled many minds for years. The mismatch between the U.S. population growth rate and U.S. wireless carriers’ ability to add oodles of new phone customers every quarter has mystified some Wall Street analysts for eons.
“Investors have been puzzling over the industry’s ‘excess growth’ for years now,” wrote Craig Moffett of MoffettNathanson Research in a recent report (registration required). “Wireless is, after all, a fully saturated industry in the U.S. And yet total industry growth (not just postpaid phone, but total phone, including prepaid) has consistently been far faster than population growth. For years.”
We hear you: It’s mind boggling – enough to make you wonder if there’s some kind of “funny math” going on. Not only was subscriber growth dramatically higher than population growth yet again in 2024 , it actually reaccelerated in Q4, "defying expectations and rising to 2.3% YoY from 2.1% last quarter," Moffett said. (See graph below.)
Young people getting their first phones sooner is one of the most commonly cited explanations for the excessive growth. That’s certainly real, but it can’t come close to explaining the magnitude of the gap. With phone growth now three times faster than population growth, the average age of first-time subscribers would have to be falling by three years every year, Moffett noted. (Wait, what? That’s nuts.)
The role of gig workers in wireless growth
What if gig workers could explain some of this? After all, drivers at companies like Uber, DoorDash, Instacart, Lyft, Grubhub and other services often use second or third phones to manage their business.
Their reasons vary. Some drivers use one phone to drive for Uber and another to drive for Lyft. Other drivers use two phones so that one can be used to display directions and ride hails while another is reserved for personal voice calls while driving. Yet another segment reports using a separate work device primarily for tax reasons; if the device is used only for work, the full cost of the phone and service can be deducted as a business expense, he noted.
Other factors driving phone growth
In previous reports, Moffett has examined, and largely dismissed, some other possible explanations for the consistently high phone growth. People owning two phones – one for work and one for personal – would be a reasonable explanation, but most market research points to that trend going in the opposite direction, he said.
Or is it? We asked Roger Entner, founder of Recon Analytics, for his assessment. His firm does research on behalf of wireless carriers that want to know exactly where subscribers are coming and going.
Without revealing the kind of specific info his clients pay for, he said there’s a lot of explanations for the wireless phone growth. “Subscriber growth comes from population growth, which includes immigration. It’s new business generation. Then you have an increased use of phantom lines,” where the third or other lines are free, he said.
There’s also a shift in the first responder community, where more people use both a personal phone and a business phone. “If you’re a police officer and something happens, your phone gets subpoenaed. It’s a lot easier if your business phone gets subpoenaed than your private phone,” Entner said. “Same thing with EMS and fire.”
But drivers for the likes of Uber and Lyft don’t account for much of the growth. “It’s a few hundred thousand, if even that. It’s not in the millions of lines and it’s not like it’s consistently growing,” Entner said.
Moffett made a similar deduction. After looking at various data, including from Sensor Tower and the Bureau of Labor Statistics, he concluded that the correlation between gig driver growth and wireless phone growth is not terribly strong, as it’s only one factor of many.
Correlation between gig work and immigration
But one thing is clear: The gig economy is likely very levered to net immigration, and the combination of tighter borders and potentially aggressive deportation of undocumented immigrants already poses a significant threat to overall subscriber growth, according to Moffett.
“To the extent that reduced immigration also impacts the number of gig economy workers – particularly drivers – in the U.S., the pressure on subscribership could potentially be amplified,” he concluded.
By the way, some Wall Street analysts are predicting more of the same kinds of growth in 2025. Based on Q4 2024 postpaid phone results, TD Cowen analysts upped their estimate of total U.S. net adds for wireless in 2025 from 7.8 million to 8.6 million.
In other words, more growth ahead for most of the wireless sector, including cable MVNOs. Buckle up. The ride could get bumpy.
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