Verizon Vs. AT&T: The Coming Data Plan Showdown
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Verizon (NYSE: VZ) and AT&T (NYSE: T) will soon go head to head over new “family priced” wireless services.
Both these companies, which have been strong competitors for some time now, plan to introduce shared-data pricing plans any day now. Whichever one of them gets there first will be known as the company that changed the way we see wireless plans. This is in response to the changing way in which the American population views these plans as well as their changing needs in this regard. The new option will be an economical one for most people. In addition, it is also likely to be the most efficient method for ensuring that you have internet access across a range of devices.
The basic premise is that you will be able to split one data bundle between numerous devices, such as your iPad and your computer. The idea is that this will be a faster and more sensible way of getting Internet access and, as people become more and more used to the service provided and the speed that it is provided at, they will start to buy bigger and bigger data bundles or plans. Neither company seems to want to be the one to make the first move, though. You can’t really blame them for the hesitancy. There is a lot of money at stake here and if they introduce this new service in the wrong way it will become an even more costly endeavor to maintain. However, whichever company gets it right first is the one that I would back. People like data plans. Once the first move is made similar plans will no doubt be available from a number of different tech companies in the very near future.
This, should it be launched successfully, will spark a change in the way that Verizon measures its revenue. Basically it will be measured according to multi-device accounts, rather than according to the number of users. This will be a measure of the company’s success. It will no longer be possible to use the old method of measurement as the new bundles and plans will necessitate a change in the way the company sees its service as well as its profits. Revenue per customer will no longer be the spotlighted figure. Revenue per account will be the new focus of attention.
Verizon is also competing with Comcast (NASDAQ: CMCSA) at present in the arena of data caps. As things stand it looks as though Comcast has the better idea. Verizon’s plan will most likely result in higher costs for its consumers, whereas the new cap plans that should soon be imposed by Comcast will in fact have a positive outcome for its consumers. Comcast has, essentially, increased its cap from 250 GB to 300 GB and charges a fee to all those who exceed the cap. Verizon on the other hand is “forcing” users who are already making use of its service to move form an unlimited data sharing plan to a tiered data sharing plan, which will most likely increase the actual prices that those users will have to pay for the Internet service.
In other less positive news, Verizon recently came into the spotlight due to accusations that it is in the process of creating a non-competitive communication cartel that will control prices and the Internet that “threatens competition and consumer choice”. Worse still it seems that Verizon has conspired with several cable companies in order to achieve this. This sort of monopoly is simply not allowed in the modern day and age and it is necessary that Verizon is prevented from achieving this ideal. At this point, Verizon itself has not commented on the accusations. To me, this news makes Verizon a shaky prospect in the near future. Should it be found guilty of creating this cartel and if action is taken against it, it could mean very bad things for the stock.
Verizon competitor Sprint Nextel (NYSE: S) has the right idea about how to keep the loyalty of its customers, an important thing for every stock to do. For example, it recently introduced a new method of making calls that allows people with speech disabilities to take part in a phone conversation without very much trouble at all. The person in question simply needs to dial a special code which will put them through to an operator. The operator then repeats what the person says to the person on the other end of the line allowing for effective communication. This is a nice step forward, if only to show that Sprint is introducing new technologies, while Verizon seems keen on working on new business models. We’ll see which proves the greater success soon.
AT&T, on the other hand, has somewhat undermined my trust of late. This comes with the news that it is one of several carriers that is vulnerable to an advanced form of hacking. Basically hackers can take control of what you do with your phone. They can post messages on Facebook on your behalf or follow other users on Twitter. The hackers could redirect you to fake banking websites to gain access to your funds. Unless AT&T finds a way to counteract this it could lose a lot of customer support as the news spreads.
Ericcson (NASDAQ: ERIC) made news recently for securing a contract that will have it support T-Mobile USA’s $4 billion network transformation. The two companies have been partners for a long time, but the teaming up could make the new network a formidable opponent moving forward. Ericcson is introducing its new “AIR” technology to T-Mobile’s LTE line. Look for any success here, as it may grab up some market share from Verizon and other phone carries.
All in all, Verizon’s success moving forward, at least in the immediate future, will depend upon how well the shared data plan system works. This goes for the industry at large, too. If you believe Verizon can pull it off, get in now and wait for a potentially huge boon.
StockCroc1 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
