Wireless carriers AT&T (NYSE:T) and Deutsche Telekom’s (DTEGY.PK) T-Mobile were once very close. For example, back in 2011, the two companies were planning a merger, until the deal was tabled by the Federal Communications Commission and the U.S Justice Department.
But the highly-competitive nature of the wireless industry — along with the ruling by the FCC and the Justice Department — have pushed the two companies far apart. AT&T has used its dominance in the industry to put down its much smaller rival, which is now slated to join forces with MetroPCS (NYSE:PCS) if shareholders approve, snubbing the smaller operator.
During the merger talks in 2011, the United States government explained that it had blocked the deal in order to protect the American consumer from anti-competitive practices to which industry consolidation can lead — but AT&T was still left with a spectrum problem. The rapidly-growing smartphone market in the United States has created a massive hunger for data, and in turn this has made carriers ravenous for more and more spectrum to support increased bandwidth use…
“The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled,” stated a press release issued jointly by both agencies…
Whether the FCC and the Department of Justice made the correct assessment is impossible to tell, but what is evident in the current state of the wireless carrier market is that competition has reached a fevered pitch.
AT&T took a jab at T-Mobile with full-page newspaper advertisements — placed in Thursday editions The New York Times, The Wall Street Journal, and USA Today — that attacked the service provider’s network performance. The advertisements claimed that T-Mobile drops twice as many calls and its service is half as fast as AT&T’s.
The rivalry between AT&T and T-Mobile began in earnest back in January at the Consumer Electronics Show in Las Vegas when when T-Mobile CEO John Legere referred to AT&T’s network as “crap.” Since taking assuming the role in September, Legere has worked to change the company’s image, reported Bloomberg, re-branding T-Mobile as the “un-carrier.”
Although that title is of questionable wisdom, as it seems to suggest that its drops (or un-carries) calls, it was meant to describe the company as an outsider in an industry dominated by the duopoly of Verizon (NYSE:VZ) and AT&T. And his campaign has indeed shaken up the industry — so much so that AT&T has felt it necessary to up its marketing game.
T-Mobile found the attention flattering, even if the advertisements did criticize its service. “Wow. Looks like we struck a chord,” Chief Marketing Officer Mike Sievert said in an e-mail. “AT&T doth protest too much. Glad they’re spending their money to print our name.”
The company’s own marking is focused on just the aspects of its service that AT&T knocked, with recent advertisements boasting of the speed and geographic reach of its new fourth-generation network. But AT&T believes that the boast is just plain wrong.
“T-Mobile’s advertising is a combination of misguided and just plain wrong,” said Mark Siegel, a spokesman for Dallas- based AT&T. The newspaper ad was “just a friendly reminder of the fact that independent third-party testing says AT&T’s network delivers faster speeds and fewer dropped calls than them.”
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