While the proposed merger between Verizon Wireless and Alltel presents a daunting challenge to AT&T and Sprint Nextel, it is far from a competitive death knell, according to new research from Probe Financial Associates. Though the $28.1 billion deal will instantly plump up Verizon Wireless’ (NYSE: VZ) subscriber base to 80.4 million customers, thanks to Alltel’s 13.2 million users, market leadership will never be about subscription numbers, the research firm reported. “AT&T isn’t likely to go out now and buy someone else just to stay bigger,” Victor Schnee, Probe founder and president, told InternetNews.com. While he does believe the acquisition is somewhat tied to Verizon Wireless’ resentment at being No. 2 — AT&T (NYSE: T) currently has 71.4 million subscribers — the deal was most likely about making sure AT&T didn’t get any bigger, he explained. “Why else would Verizon Wireless pay such a top price,” he said. “We’re guessing that Alltel’s owners threatened to possibly piecemeal out its business, which would be a real threat,” he said. Yet, no matter how many subscribers Verizon might get on paper in the deal, market success won’t be determined by numbers, nor network service, Schnee said. “Just take a look at Sprint,” he noted. “It has the best network service of them all, but they’re getting killed.” The factors that will determine market dominance are price and device, and, in the near future, mobile applications, as all are important to users, Schnee explained. In that regard, every carrier has an opportunity to dominate — even fourth-place Sprint. The carrier, however, may need a little bit of luck as well, as AT&T seems to keep grabbing the lion’s share in terms of exclusive device deals. AT&T locked up the first Apple iPhone a year ago and now has exclusive rights on the second generation launched this week. It’s also the lone carrier, so far, that will be selling Research In Motion’s (NASDAQ: RIMM) BlackBerry Bold later this summer. “AT&T guessed right in going with the iPhone last year, and it turned into a big deal,” Schnee said. “What Sprint has to do is get very lucky in that regard as well. They have to start taking risks on far out device concepts.” That’s because users identify with the device in their hands, and sometimes carrier choice is really device choice. “It’s all about product distinction,” Schnee said. Yet such product exclusiveness could prove elusive at some point, as at least one public advocacy group believes it’s a discriminatory practice. In late May the Rural Carriers Association (RCA) appealed to the Federal Communications Commission to investigate what it calls “anticompetitive effects” of exclusive device deals between handset makers and the nation’s top-five leading wireless carriers. If exclusive deals are outlawed, the next wireless aspect customers care most about is price, according to the research firm. In that regard every carrier seems to be working overtime to beat the competition, though few will publicly admit it. “We’re not going to discuss our strategies for providing rate plans or future offerings, for competitive reasons,” Jenny Parker, an AT&T spokeswoman, told InternetNews.com. For its part Verizon Wireless said its rate strategy is about “allowing users to create a plan that fits their lifestyle,” Debra Lewis, Verizon Wireless spokeswoman, told InternetNews.com.
While the four leading carriers declined to discuss specifics on how rate plans and pricing worked as a competitive element, they’re obviously a big factor. AT&T has steadily pushed out new rate plans and programs in trolling for new customers. Not only did the carrier grab the wireless networking contract for Starbucks right out of T-Mobile’s hands this year, the carrier is rolling out new specific marketing at the coffee drinking population. AT&T now offers two hours of Wi-Fi to Starbucks cardholders who spend at least $5 a month at the coffee shop. The programs are in addition to new rate plans AT&T began pushing since the start of the year. In February AT&T, Verizon Wireless and T-Mobile announced fixed-price unlimited calling plans for $99.99. T-Mobile even added unlimited texting. The next day Sprint Nextel (NYSE: S) rolled out unlimited voice, data, text, e-mail, Web access, GPS service, as well as Sprint TV, Sprint Music, and Direct Connect and Group Connect options in one plan for the same price. Meanwhile, just last week AT&T announced Net Reach, a bundle providing home and on-the-go high speed Internet services starting at $79.95 a month. The week before T-Mobile announced a new family unlimited plan. “Rates are going to be a big part of winning customers,” Schnee said. And that’s exactly where Sprint may be able to gain some ground, he noted. “They’ve got the reliable network, and they’re pushing out good prices. They just have to stop trying to imitate AT&T and start hurting AT&T,” he said.  News Around the Web InternetNews is a source of industry news and intelligence for IT professionals from all branches of the technology world. InternetNews focuses on helping professionals grow their knowledge base and authority in their field with the top news and trends in Software, IT Management, Networking & Communications, and Small Business. AdvertisersAdvertise with TechnologyAdvice on InternetNews and our other IT-focused platforms. MenuOur BrandsProperty of TechnologyAdvice. |
Wireless Fight Is All About Price, Product
