On 2009-12-05, SMS <scharf.steven@geemail.com> wrote:
> Mark Crispin wrote:
>
>> Suffering nationwide ridicule, AT&T dropped its lawsuit. In return
>> Verizon dropped its counter-suit which, if successful, would have had a
>> judge declare that Verizon's claims of "most reliable" and "America's
>> best 3G network" are accurate.
>
> Verizon is getting a huge return on their 3G advertising campaign. Not
> only are the ads well executed and accurate, they goaded AT&T into a
> foolish lawsuit which resulted in mountains of ridicule and bad
> publicity for AT&T. You can't buy that kind of bad publicity for a
> competitor! The desperation ads AT&T is airing in response are very
> weak, and technically inaccurate, though they must know that Verizon is
> too smart to sue.
>
> And of course AT&T got hit with a double whammy with the release of the
> annual Consumer Reports wireless comparison survey, where they were dead
> last in a survey of 50,000 wireless users.

I don't actually think anyone who is already an AT&T user needed CR
to tell them the state of AT&T's network, they already have first-hand
knowledge. Yet so far this year this hasn't shown any effect on AT&T's
operating results as measured by their quarterlys, or at least whatever
effect it has had has been more than balanced by other factors.

And as for Verizon's ad campaign, you express a lot of opinions about
its effects but I don't think any facts will be generally known until
this quarter's 10-Q's are filed. When they are I'll try to remember
you made the above prediction so I can compare it to their actual
results; I don't think you've done too well in the prediction department
in the first 3 quarters of the year.

> All AT&T can come up with is that their churn is pretty low, so that
> must mean everyone is happy.

Here's a quote from Verizon's CYQ2 10-Q (and every quarterly for a very
long time before that, but not CYQ3):

"We believe that we have the most loyal customer base of any wireless
service provider in the U.S., as measured by customer churn."

So it is okay for Verizon to say it when their churn was lowest, but
not for AT&T when that changes? You yourself used to post summaries
of the quarter which touted VZW's amazingly low churn, but I haven't
seen you do that since Verizon's results began to look less wonderful
than they used to.

The fact is, though, that it isn't so much that AT&T's churn has gotten
lower (it has, but only a bit), it is that Verizon's has gotten a lot
higher while AT&T's has drifted down. I don't remember Verizon's churn
ever being higher than AT&T's, but they crossed over this quarter.

In addition, Verizon's ARPU has been slipping this year while AT&T's has
still been drifting up, and those numbers also crossed over this quarter
for the first time in my memory. And Verizon's net subscriber additions
have been falling all year with their increasing churn; if I remember
correctly AT&T has topped them every quarter this year (i.e. this wasn't
just a CYQ3 quirk), a statistic which is particularly annoying since VZW
is now a bigger company than AT&T Mobility. Verizon is still a very
profitable company, but their results aren't nearly as dominating as they
once were and have continued trending in a bad direction. Verizon really
needs to fix that, and I hope their advertising does it since they haven't
changed much else.

The facts so far this year suggest that Verizon's undeniable advantages
over AT&T are no longer translating into better results for Verizon,
so AT&T must have some offsetting advantage that matters more than all
of that. I believe that advantage is that people have begun to value
handset selection (and not just the iPhone; less than a quarter of AT&T's
new customers in the recent quarter activated a new iPhone, but the
other 77% came regardless) more highly than they once did, and AT&T
has always (IMO) had a much better selection of handsets (including
those not sold by AT&T) than Verizon. I hope Verizon's attempt to
refocus this back on "It's the network" works, but I'm not sure I'd
bet on that.

Dennis Ferguson