The battle for market share among wireless carriers develops this week as AT&T (NYSE:T) rolls out 11 new long-term evolution markets in the United States, bringing the telecom services provider up to a new total of 120 markets.
The timing here is no coincidence. AT&T’s rollout this week brings its total to 17 new markets for the month of December, a 16.5 percent increase in market coverage right before Christmas shoppers decide what carrier to use for their new iPhone 5.
LTE is quickly doing to 3G what Fios did to DSL. One is fast, sure, but the other is faster, and Verizon (NYSE:VZ) has a finger in both pies. Verizon Communications has a long-running advertising campaign that boasts its industry-leading LTE network that spans over 440 cities. In the wireless game, bigger is pretty much better, implying better service in more locations. And for America’s data-hungry smartphone culture, faster is better.
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While the numbers look pretty one-sided (440 markets for Verizon, 120 for AT&T), the answer to the question of “what company has the bigger market” is not that straight forward.
AT&T’s LTE build out has been complimented by its development of Evolved High-Speed Packet Access (HSPA+), which effectively enhances 3G networks and grants speed comparable to 4G. Including this enhanced backhaul in its definition of 4G network, AT&T claims 3,000 more cities and towns than Verizon…
A core component of our CHEAT SHEET investing framework explains that companies riding macro trends tend to outperform those that don’t. Think of the investing proverb, “a rising tide raises all boats.” In this case, the tide consists of smartphone users with high data demands and if the boat isn’t big enough, they’re going to go somewhere else.
Verizon is pretty much king of the hill and everybody’s gunning for its spot. AT&T’s pre-holiday rollout is just a step or two up the hill, but it is critical for the carrier to keep moving if it wants to maintain its number-two position, let alone shoot for the top.
Sprint Nextel Corp. (NYSE:S), the third-place player in this story, has made headlines repeatedly because of its ambitions to build out its own network, bring more customers into the fold, and generally light a fire under AT&T’s…feet. The company, which is in the process of forking over a 70 percent stake to Japan’s Softbank, made a bid for the remaining 48 percent of Clearwire Corporation (NASDAQ:CLWR).
A completed deal would leave Sprint with highly-valuable spectrum holdings and a heap of new customers.
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