What’s The Difference Between Tier 1, 2 and 3 Carriers, And Who Are They In The US?

Delving into the technical aspects of wireless carriers and how they operate, one interesting concept relates to how the carriers access and distribute its network backbone- meaning mobile …

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What's The Difference Between Tier 1,2 and 3 Carriers, And Who Are TheyDelving into the technical aspects of wireless carriers and how they operate, one interesting concept relates to how the carriers access and distribute its network backbone- meaning mobile voice and data services.  You’ve likely heard the terms “tier-1″ or tier-2” carriers, but what does it mean and how do the major US carriers stack up?

Put simply, a tier-1 carrier possess a network in which it’s the sole operator- meaning it has a direct connection to the Internet and the networks it uses to deliver voice and data services.  Similarly, a tier-2 carrier operates the same way, except it may get a portion of its network from a tier-1 operator by way of a concept known as “peering,” which can be loosely defined as piggybacking onto the network already in place by a tier-1 source.  Tier-3 refers to a carrier who gets 100% of its network through a tier-1 or tier-2 operator, with no direct-access of its own.

The landscape in the US has changed dramatically in recent years, with consolidation of smaller carrier making way for a select group of premiere carriers- mainly AT&T, Verizon, Sprint and T-Mobile.  All four of the aforementioned wireless carriers are tier-1 carriers, meaning they don’t borrow network capacity from anyone else.  These four tier-1 operators have been busy acquiring tier-2 and tier-3 carriers in an attempt to broaden its subscriber base, leaving very few independent tier-2 and 3 operators in the US.  An example of a tier-2 carrier in the US is U.S Cellular, who has an agreement in place with Sprint for voice and data coverage.

A tier-2 or tier-3 carrier is most likely a smaller, regionally-based carrier focusing on smaller networks, who can simply buy voice and data coverage from one of the big guys (a tier-1 operator) and re-sell it to its subscribers without those subscribers knowing the difference.  From a marketing standpoint, however, working with tier-1, 2 or 3 carrier can make a difference in terms of distribution- especially in terms of SMS and other network-specific channels.  In the end, it remains a technical aspect of wireless carriers that most consumers will never need to worry about, but if you’re a mobile marketer targeting carrier-specific channels, it’s definitely worth your time to do some homework and become familiar with the concept.

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5 comments

  1.    Reply

    Let's hire a business major to discuss the tier structures but if i ask questions regarding tier infrastructure it goes blur or rambling of their mouths of nothing significant…. As a Chief Architect in the TELECOMS everyone is discussing layers but not of substance or technology defining the what makes up the tiers its more like someone getting around the stock market but not knowing how the infrastructure works, the real tiers of the systems. A bit confusing for the average person to understand but I think it is explained in layman terms reasonably well.

  2.    Reply

    Companies which usually have a revenue more than 1 billion $ comes under tier 1 companies with more than 50000 employees.
    Companies with revenue over 100 million comes under tier 2 companies list wioth employment of 4000 t0 10000 employees approx.
    Comapnies having revenue less than tier 2 companies are classified as tier 3.

    Is this correct??

    1.    Reply

      While that may be the case, that is not the deterministic factor. Revenue and # of employees is more of an operational scales result – I think the proper definition is in line with the description here. Ownership of networks/connectivity.

      Tier 1's peer, AND resell
      Tier 2's carry to Tier 3's
      Tier 3's touch end users.

      The article does touch on the acquisition and growth factor of some Tier 1s.. The four US tier 1's mentioned in this article blur across Tier 1 – Tier 3, but their Tier 1 designation supersedes (hierarchically) lower Tier classification.

      Clearer examples of Tier 1, 2, 3 could be:

      Level 3 who own major national networks and sell to Tier2's like Allstream. Allstream may buy services from several Tier 1's for reliability and sell services to TechSavy (Tier 3) who would sell to consumers.

      Note: Bell would be a Tier 1-3 here in Canada. They own their own networks, sell to Tier 2's, Sell to Tier 3's and Sell to Consumers.

  3.    Reply

    Great explaination of Tier 1 and beyond. We offer Mobile marketing services in Barrie, Ontario as a tier one supplier. On in a workshop we are offering your article helped explain the differences between Tier 1, 2, 3…

  4.    Reply

    Great article Justin, I definitely need to brush up a bit on my concepts of mobile networks. Do you have any further material that you would recommend in getting caught up in this field?