Summary
1. Which company “can crack the hegemony of AT&T...and Verizon Wireless as the top two wireless carriers in the U.S?” 2. The answer is Verizon Wireless. 3. The market dynamics in wireless are vastly different than in the enterprise space in which a duopoly between AT&T and Verizon is almost ensured.
Analysis
Essentially, over half of the original Ma Bell is competing against Verizon, a much leaner and nimble player in a highly competitive mobile market. We have talked about the size envy factor that is driving Verizon to dominate the US wireless space. However, AT&T’s abundance of unprofitable local lines along with their high operational costs is going to weigh the carrier down for some time. In addition, there is no assurance that the service provider will get its managerial act together to make wireless a key priority.
There could be the scenario that Verizon Wireless can get an exclusive agreement on Apple’s iPhone or perhaps another device that is very attractive – right at the outset of 4G. It is not inconceivable that AT&T could see a lot of its customers moving over to Verizon. It seems unlikely that AT&T could buy its way back to a leading position.
When it comes to the communications needs of large enterprises, they really do want to have at least two principal service providers, especially concerning mission-critical traffic. This type of demand just does not exist in the wireless market.
