AT&T vs. Verizon
Let's get this straight: AT&T and Verizon are not having an argument. It's more like a knife fight for dominance of the burgeoning wireless market.
They're fighting for new customers and to hang on to old ones. They're fighting for a new generation of smartphones. They're fighting to expand 3G and now 4G network infrastructure, including all-important backhaul capacity. They're fighting the Federal Communications Commission over proposed "network neutrality" rules. They're even fighting over advertising.
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It's a different world from 25 years ago with the end of the original AT&T phone monopoly.
AT&T has surged from 65 million wireless customers in 2007 to 87 million wireless customers in the first quarter of 2010.
Arch-rival Verizon boosted its subscriber rolls with its Alltel acquisition, from 63.6 million wireless customers in 2007 to 92.8 million wireless subscribers in the same period.
Both are making huge investments in network infrastructure to attract and retain customers who increasingly look to their mobile operator as a data and services provider, not a voice carrier.
AT&T is racing to expand its 3G network, which is based on HSPA (High-Speed Packet Access) 7.2, with a maximum throughput of 7.2Mbps. Verizon uses EV-DO (Evolution-Data Optimized), which that carrier said offers as much as 1.4Mbps in real-world performance. But in both cases, the speed of the network for individual subscribers depends on a variety of factors.
Since its exclusive U.S. launch of Apple's wildly successful iPhone in 2007, AT&T has been battered by bad publicity over its network performance and complaints of dropped calls. The company responded by aggressively installing upgraded cell sites and more backhaul capacity. AT&T also is using more spectrum on the 850MHz band, to improve capacity and propagation, especially in major markets.
The iPhone has been a huge factor in AT&T's growth, and in its network problems, at least according to the carrier, because iPhone subscribers are heavy data users. The recently launched iPad, also exclusively on AT&T, looks to be another consumer hit for the carrier.
Both AT&T and Verizon are looking ahead to even faster so-called 4G networks. 4G technologies represent the next stage in the evolution of wireless data technologies and generally deliver average download rates of 3Mbps or higher. In contrast, today's 3G networks typically deliver average download speeds about one-tenth of that.
By the end of 2010, Verizon expects, perhaps optimistically, to be offering its 4G Long-Term Evolution (LTE) services commercially in 25 to 30 major U.S. markets. The company recently announced early LTE tests in Boston and Seattle showed downstream throughput of 5M to 12Mpbs, and upstream rates of 2M to 5Mbps.
AT&T will be trialing 4G later in 2010, with a commercial launch in 2011.
Despite the technological dazzle of LTE, it will be slow to take hold. The key limiting factor for both carriers will be the slow introduction of LTE-capable phones and devices.
Both carriers are struggling with a new regulatory environment under the Obama administration. The FCC is considering so-called network neutrality rules, which would limit what all network providers could do in managing data traffic over their networks. Limits could be especially problematic for wireless carriers.
The political battle underlines the shifting nature of wireless communications. Both carriers are struggling to adapt as communications moves toward an all-IP world. They have a lot of work to do, as a January 2010 subscriber survey by Consumer Reports found: though data use is soaring, only 24% of data-service users rated their Web and e-mail experience as excellent.
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