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Lisa Hronek Posts Tagged ‘AT&T’
T-Mobile Up For Grabs Again
AT&T recently announced that its attempt to acquire fourth-place U.S. carrier, T-Mobile, is officially dead. Besides being a big loss of potential future earnings for AT&T, it also means the loss of $4 billion, which AT&T now owes to T-Mobile’s parent company Deutsche Telekom in the form of money and spectrum access. So who’s next in line to fight for T-Mobile? It appears that Sprint may be back at it again. Sprint had previously negotiated with T-Mobile, prior to AT&T’s deal, and it might try again in an effort to increase its 17% market share, and stay afloat in a market that is overpowered by AT&T and Verizon. However, there are some obstacles Sprint would need to overcome for a merger to even be possible. One is the severe cash shortage they are experiencing as a result of their recent acquisition of the iPhone. Another is network compatibility issues. At this point this is all just speculation, as there are potentially many buyers chopping at the bit to get a piece of the lucrative wireless market. Until anything is decided for certain, we can definitely expect to see that super tall girl in the hot pink dress a little while longer.
iPhone Network Comparisons
The iPhone is now offered on three different carriers: AT&T, Verizon, and Sprint. If you’ve been watching television lately, you might have noticed that the competitive ads are beginning to heat up; each one focusing on that network’s supposed strength. A recent study performed by Metrico Wireless, a mobile device performance analytics company, reported that AT&T wins for fasted data speed (plus AT&T is the only carrier that lets you talk and surf at the same time), Verizon has the most reliable phone service, and Sprint is getting lots of attention because of its unlimited data plan. The study by Metrico Wireless included 6,000 voice calls, 8,000 data doanload/upload tests, and more than 21,000 web pages. Among the three carriers, Verizon dropped the fewest number of calls (2.1 percent of the time), Sprint had the highest call quality on outbound calls, and AT&T had the highest call quality on inbound calls. When it comes to download speeds, Metrico concluded that AT&T was the clear winner with a maximum download speed of 6,047Kbps (Kilobits per second) – impressive compared to Verizon, which came in at 2,371Kbps, and Sprint with only 1,767Kbps.
However, what any iPhone customer will tell you is that when it comes to call quality and data speed, it’s all about location, location, location. It is unclear exactly where Metrico conducted its bandwidth test, so these results should be taken with a grain of salt. I have learned from personal experience that AT&T’s service can differ drastically from one area of Chicago to another, so state to state is sure to vary as well. Another interesting conclusion from Metrico was that the most recently released iPhone 4S performed perfectly across all three networks, 100% of the time. What I think this means, is that even though you might get a different experience on each network, it appears as though technological advances may be leveling the playing field.
Putting the Full Court Press on the AT&T Merger
September has not been a good month for AT&T. First the Justice Department sued them to block their $39 billion takeover of T-Mobile, and then Sprint joins in and files an antitrust lawsuit against them. We’re not even half way through the month! What’s next? The bigger question is whether AT&T can find a way past the full court press or is this the beginning of the end for their chances at wireless domination?
Sprint’s lawsuit just adds fuel to the fire by showing how much the merger would affect them and other smaller carriers if AT&T and Verizon have exclusive control of networks and 80% of wireless customers. But the biggest problem will come down to the Justice Department’s lawsuit. AT&T will need to prove that not only will this merger be beneficial to customers through things like better service and coverage, but show that customers will still have several options to choose from when it comes to wireless carriers in their area. Concerns about loss of jobs will also need to be resolved. With the right amount of lobbying, any suit (even one this big) can be settled. One positive is that these lawsuits have come earlier rather than later. Given that AT&T has until next September 2012 to gain approval, it should be ample time to do what they need to do to state their case. If AT&T gets through these two opponents (Justice Department and Sprint), it still leaves them in the final matchup with the FCC, which they have to win to gain the final clearance. The pressure will continue to be intense; we’ll see if AT&T can break through and hold the wireless crown in the end.
Increased Revenues? Or Low Prices?
With the recent volatility in the stock market, I thought it would be interesting to look at the market from two perspectives. One perspective is that as a stock owner, I want companies to increase revenues and drive up market share. However, as a consumer, I want low, low prices with lots of free stuff. This polarity is a difficult line for companies to walk with consumers/shareholders and a line that we have seen recently in the news from telecom companies.
AT&T recently scrapped its $10 per month charge for 1,000 text messaging plan in favor of a $20 per month unlimited text messaging plan or their family plan of $30 per month for unlimited texting across five phone lines. As a consumer, I do not think I have utilized 200 text messages, let alone 1,000 text messages in a month. However, I am likely in the minority. CTIA (Cellular Telecommunications Industry Association) showed that text messages sent in the US increased from 1 trillion in 2008 to over 2 trillion in 2010. The new AT&T plan is interesting to me in that they have eliminated the lower cost option, as well as increased the price for consumers. Technically, existing consumers are still grandfathered into their old texting plans, but this revenue play appears to me as a new way for AT&T to gain additional revenue. More revenue is always good for stockholders, but not necessarily good for consumers. My take is that text message pricing might be difficult to increase since people can send free messages from competitor smartphone texting apps, such as GroupMe and Beluga, as well other communication vehicles, such as Skype.
Verizon is also changing the telecom revenue landscape by introducing its new service of Verizon Video. This on-demand application for 4G and select 3G Android smartphones allows streaming of over 250 current TV shows, sporting events, newscasts, and on-demand video. The service will cost subscribers $10 per month, or $3 for a 24-hour pass. A Verizon data plan is required because the service does not allow video to be accessed via free Wi-Fi. The interesting decision by Verizon forces the Verizon Video subscribers to utilize data from their data plans and thus it will likely force consumers to run over their monthly data caps. Again, does anyone know how much data usage occurs on their smartphone? I know I never keep track. This new service from Verizon will likely increase revenues and fees from the consumer, which is good for stockholders, but not necessarily ideal for consumers. Likewise, the Verizon Video is currently priced higher than its competitors of Hulu and Netflix, both of which are priced at $7.99 per month and can be accessed via free Wi-Fi.
Will the revenues continue to increase for telecom providers from these new initiatives? It is too soon to tell. However, I know companies will continue to try to increase their fees and grow their revenues through new initiatives now and in the future. Regardless, competitive pricing and healthy competition is good for both consumers and companies in the stock market.