Verizon and AT&T compete for wireless subscribers
A heated battle is brewing between AT&T and Verizon Wireless, the No. 1 and No.2 cell phone operators in the U.S., as they duke it out for new cell phone subscribers. And things will likely only get more intense as AT&T ramps up iPhone sales.
On Monday, Verizon Wireless, which is jointly owned by Verizon Communications and European cell phone company Vodafone, announced it had added 1.3 million net customers to its roster for the second quarter of 2007. Meanwhile AT&T, which reported earnings last week, racked up 1.5 million new cell phone subscribers in the second quarter.
Wireless is proving to be a key revenue driver for AT&T and Verizon. So signing up new customers is very important for these companies. In 2006, the U.S. cell phone penetration rate was about 72.5 percent, according to the CTIA. And as penetration increases, cell phone operators, like AT&T and Verizon, are going to have to work harder to find growth.
Right now, the companies, which do not compete at all in the residential phone market, are neck and neck in terms of overall subscribers. Verizon Wireless ended the quarter with 62.1 million subscribers, and AT&T reported 63.7 million wireless customers at the end of the quarter.
But AT&T will soon pull further ahead of Verizon with the pending $2.8 billion acquisition of Dobson Communications, a rural cell phone carrier that serves about 1.5 million customers. Verizon is also looking to bulk up subscribers through acquisition. The company also announced Monday it would spend $757 million to score 716,000 subscribers from Rural Cellular, which provides cell phone service in 15 states under the Unicel brand.
AT&T could widen that lead in the coming quarters with its exclusive deal with Apple for the iPhone. AT&T said it activated 146,000 iPhones in the first two days the device was on sale. While this number wasn't as high as some analysts had expected, AT&T has said that it has seen strong sales in July and traffic in its store is way up.
One thing is clear, the iPhone is like no other phone on the market. And unless Verizon and its phone manufacturing partners can come up with something just as cool, there will be some defections from Verizon to AT&T. But it may take some time to see this play out in the numbers. Many subscribers will likely wait for their Verizon contracts to expire. Or they'll wait for a 3G version of the iPhone. Some may even wait for AT&T and Apple to lower the price.
Exactly how much the iPhone will impact Verizon's overall business is hard to say. The company has consistently maintained strong sales and a low churn rate. Despite having fewer customers, Verizon Wireless reported stronger sales than AT&T in this most recent quarter. Verizon reported $10.8 billion in sales during the quarter, compared with $10.4 billion for AT&T. Verizon also once again reported a lower churn rate than AT&T. Verizon lost customers at a rate of 1.08 percent compared with AT&T's 1.6 percent rate.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.
The other number to look at is churn. Verizon maintains an excellent churn rate, while AT&T is losing more of their customers - even with the iPhone boost.
So, total sales go to Verizon; profitability goes to Verizon; and the one with the lower churn rate is Verizon... I'm sorry, but it sounds like AT&T is trying convince everybody that it's brand is what it used to be.
on every factor except total number of subscribers. However, I
also believe that Verizon's practice of sticking it to their
customers with poor data/service plans and crippled phones will
hurt them as customers become more savvy and want improved
data and phone/computer integration.
if verizon gets competitive with its minutes, it can gobble up t-mobile and at&t customers in no time. the only reason i hear my friends say they want to stay with at&t or t-mobile is the fact that they get a bunch of more minutes than veriz.
i do not know whether veriz is cognizant of their less minutes for the buck problem.
my 2 cents worth.
regards
Ravi.
It's a case that you get what you pay for, though they are really pushing that to the point that I may accept poorer service.
ATT's service is what sucks. I'll pay more for far fewer dropped calls, faster downloads, v-cast and intelligent customer service.
Three small companies are in the process of completing towers and networks here. I am an AT & T advocate..won't switch. Just can't believe the lack of support from my phone co.
We need cheaper SAT phone services.
Coverage is dificult when u map things in long/lat/elevation.
Verizon. Unicel is the best deal of them all. They offer free
incoming calls and messages of any kind or size for no extra
charge and from time to time they give their customers credits for
free ringtones and games. Verizon is awful overpriced with awful
phones. Sprint is OK but they don't have the best selection of
phones and their basic plans are over priced. Another downside to
Verizon and Sprint is they are CDMA.
- If Verizon takes over all is bad for Unicel customers.
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by w5a5
March 5, 2008 10:51 AM PST
- If Verizon takes over they will not let Unicel subscribers keep their
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Reply to this comment
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(14 Comments)phone number or their phones since Unicel is GSM and Verizon is
CDMA. Verizon will not honor contracts or any of the features
Unicel offers. Unicel subscribers will be stuck with any handset that
is given to them by Verizon. Verizon is only doing this to replace
lost money from Amp'd mobile. Unicel subscribers WILL be treaded
very poorly.