The telecom sector saw quite a few developments in the past week. AT&T (NYSE:T) started the week off with an aggressive promotional discount of $100 that effectively made the Nokia (NYSE:NOK) Lumia free with a two year contract for all new subscribers. Sprint (NYSE:S) is also making big plans to promote LTE with the launch of HTC 4G EVO this week and a $100 LG Viper next week, despite not having a network to support the phones yet. Meanwhile, Verizon (NYSE:VZ) made a vague attempt at dispelling regulatory concerns about its spectrum deals with cable companies by saying that it is planning to come up with a mobile video service by the year end if the FCC approves its spectrum purchase.
AT&T will launch the first LTE-enabled Windows Phone, the Nokia Lumia 900, for $99.99 on April 8. At this price point, not only is the high-end smartphone half as expensive as the latest iPhone 4S but is also slightly less expensive than the two-year old iPhone 4. To make it even more enticing for new subscribers, the carrier even ran a promotional rebate scheme of $100 over the weekend to pre-order the Lumia, effectively making it available for free with a two-year contract. AT&T has even claimed that the LTE-enabled Lumia will be its biggest product launch ever, surpassing even the iPhone.
- Verizon’s Q4 Review: Wireless Business Performs Well Despite Competition
- Key Metrics To Watch As Verizon Reports Q4 Earnings
- The U.S. Wireless Industry: 2015 In Review
- Strong Customer Retention Drives Verizon’s Q3 Earnings
- Verizon Q3 Preview: Postpaid Adds, Churn In Focus As Rivals Step Up Promotional Activity
- Will Verizon’s Streaming Video Service Catch On?
With AT&T’s LTE coverage expected to lag Verizon’s well into the next year, the former is looking to make up for less coverage by aggressively launching popular smartphones and marketing them well. The launch of Lumia and a strong line-up of LTE-capable smartphones soon after should ensure that the carrier can at least partially recover the huge capital expenditures it has been incurring through the increased adoption of its LTE phones. (see AT&T Pushes LTE Aggressively Through Lumia)
Not to be left behind, Sprint has also decided to jump on the bandwagon, unveiling the HTC 4G EVO this week. Taking the cue from AT&T, it is also planning to launch a $100 LTE-capable smartphone, the LG Viper next week. With Verizon and AT&T getting aggressive with their LTE plans, Sprint is not letting its lack of a LTE network come in the way of marketing the high-speed network and staying relevant in the race.
Verizon is pitching a new kind of integrated wireless and wireline TV service that it plans to launch by the year end provided its spectrum deals with the cable companies get approved by the Federal Communications Commission (FCC). In a recent Wall Street Journal report, Verizon stated that its wireless video service would allow pay-TV subscribers to access some content à la carte on their mobile devices. Verizon is seeking approvals from the FCC and the Department of Justice (DoJ) for about $4 billion in deals to buy spectrum licenses from cable companies such as Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC) and Cox Communications.
Verizon hopes to show the FCC that the spectrum deals will benefit the consumers and improve their TV experience to an extent that it warrants an approval. However, we do not see how this move addresses the bigger anti-competitive concerns that the FCC and critics have around carriers and cable companies working together too closely. Moreover, there are many similar offerings in the market and very little demand for cellular-only TV services; so we don’t see why the FCC would consider this proposal alone to be a value-add significant enough to approve the spectrum deals.
In order to win approval, Verizon should look for ways to alleviate the anti-competitive concerns and make a compelling case vis a vis its spectrum crunch situation, rather than try to side-step these real problems with half-baked solutions that hardly have any tangible benefits for the customers. (see Verizon Does Little To Dispel Regulatory Concerns)