AT&T Competitive Environment, Case Study Example

Introduction

The proposed merger of AT&T and T-Mobile in 2011 has redrawn the wireless market in the United States. According to a recent Focus Report (Yankee Group, 2011) the market share still differs from state to state. The biggest competitor nationally being Verizon, with almost the same market share as AT&T. (Yankee Group, 2011, p. 1.) While AT&T managed to increase its market share after the merger, there are still some states dominated by Verizon, such as Boston, Baltimore and Tampa. The below report will analyze the wireless competitive environment which affects the marketing and corporate strategies of AT&T.

Competitive Environment

According to the company’s recent report, (AT&T, 2012), the most suitable area of business for growth is 4G LTE. The increasing demand for high speed IP broadband services in the United States creates a perfect environment for innovation, strengthening market position through U-Verse developments. Further, the demand of businesses for fiber optic broadband and reliable connection is also calling for a transition towards wired+wireless IP-VIP service. In the report, the executives of the company also call for the extension of competitiveness within broadband services and becoming a leader in enterprise connectivity.

Threats Regarding Competitiveness of AT&T. According to Ousler (2012), some areas’ customers get sub-standard service and often experience network failure.

Competitors like Verizon are ahead of AT&T in introducing the latest smart phones included in existing customer packages.

Both Verizon and AT&T are threatened by the new unlimited text and data plans introduced by Sprint and T-Mobile, according to Engebretson (2013).

Customer dissatisfaction with the service, ranked the “worst carrier in America”. (CNN, 2012)

Opportunities to Improve AT&T’s Competitiveness. 4G LTE Technology can increase customer satisfaction and by becoming a leader in the industry to introduce the new modules, as well as affordable packages, AT&T can create further competitive advantages for the brand. (J. D. Power and Associates, 2012)

4G network coverage growth can also help the company strengthen its reputation through becoming a truly innovative company.

Growth of US mobile phone subscriptions is predicted to grow by 1.4 percent on the average each year until 2015. (Yankee Group, 2011)

4 year exclusivity deal with Apple. The company can leverage on the popularity of the latest iPhones. (CNN, 2012)

Competition Data Analysis

AT&T’s main source of profit is from wireless services, according to recent financial reports. Wireless services account for 52 percent of the revenue, however, Verizon, the main competitor is close in sales figures. The most important competitive advantage of the company is the high profit margin, however, revenues and new subscriber numbers are not growing fast enough to be able to tackle Verizon’s aggressive marketing. Indeed, the 2012 profitability figures comparison show that even though AT&T has a greater market share than Verizon, the difference is negotiable. Customer service and service improvements implemented by Verizon (J. D. Power and Associates, 2012) threaten the market position of AT&T. \

Main Competitors

When looking at some of the SWOT analysis of AT&T (Market Research, 2013), most of the threats related to the market position of the company are based on the strong competition and technological developments of wireless internet companies.

Verizon. The company is the strongest competition of AT&T in the small business market, according to the reviewed Advisory Report (2010). They provide a faster ADSL service, providing more choices for businesses, however, their prices are still above IT&T’s even after the merger. Their voice and data bundles provided for businesses, however, are more affordable and offer more service. (Advisory Report, p. 3.)

T-Mobile. One of the main threats the company imposes on the market position of AT&T is on the mobile market. With the introduction of the new “Jump” plan has forced AT&T to create “Next” as a new plan for mobile customers, while Version introduced the Edge Upgrade, focusing on repeat and loyal customers.

Sprint. Sprint has some of the most competitive prices for non-commercial mobile customers, offering cost-effective bundles and upgrades. They also have a strong basis of loyal and satisfied customers. Customer service and easy upgrade plans are the competitive advantages of the company.

Comparison of Verizon and AT&T

While AT&T is focusing on providing competitive technologies and invests into new plans to meet business demands, for example high speed fiber technologies and the combination of wired and wireless broadband, Verizon’s executives are constantly analyzing, surveying existing opportunities and demands, and aim at increasing the company’s market share. Still, the company’s service is only regarded second best on a national level, and without making changes to customer service, AT&T will soon lose more customers than it can gain, due to the aggressive marketing strategy of Verizon.

Conclusion

According to the above noted Advisory Report (2010, p. 4.), a strong competition is likely to impose a threat on AT&T’s market position, and prices are going to be drawn down while the technological developments are going to be the main source of creating a competitive advantage on both residential and business markets. Further, focusing on customer loyalty schemes and satisfaction is the only way to preserve the leading position of the company on the wireless market. The 2012 Annual Report (Verizon, 2013) emphasizes the importance of meeting customer needs and increase technological development in order to be able to compete with AT&T. The report confirms that the new 4G LTE technology imposes a real threat on the market position of AT&T alongside with the company’s approach towards the market’s constant monitoring in order to meet customer needs.

References

Advisory Report.(2010) AT&T versus Verizon: Who Stands Up Best Against the Competition in the Small Business Market. Current Analysis. Retrieved from http://www.currentanalysis.com/f/2010/smallbusiness/files/CurrentAnalysis- SmallBusiness.pdf

Engebretson, J. (2013) New Sprint, T-Mobile Plans Threaten AT&T, Verizon Dominance. Retrieved from http://www.telecompetitor.com/new-sprint-t-mobile-plans-threaten-att- verizon-dominance/

Goldman, D. (2012) Surprise! AT&T’s network got very good. Retrieved from http://money.cnn.com/2012/01/09/technology/att_network_gets_better/

J. D. Power and Associates. (2012) 2012 U.S. Wireless Network Quality Performance Study– Volume 2. Retrieved from http://www.jdpower.com/content/press- release/6ucNMG2/2012-u-s- wireless-network-quality-performance-study-volume-2.htm

Market Research. (2013) AT&T Inc. – Financial and strategic SWOT analysis review. Global Data. Retrieved from http://www.marketresearch.com/GlobalData-v3648/Financial- Strategic-SWOT-Review-7412356/

Ousler, A. (2012) AT&T Drops the Ball With Dropped Calls. In areas with awful cell reception, AT&T is often the worst offender. Retrieved from http://investorplace.com/2012/08/att- drops-the-ball-with-dropped-calls/

Verizon (2013) Annual Report 2012. Financial and corporate responsibility performance.the
world’s biggest challenges deserve even bigger solutions. Retrieved from http://www.verizon.com/investor/app_resources/interactiveannual/2012/
downloads/12_vz_ar.pdf

Yankee Group (2011) AT&T/T-Mobile merger: more market concentration, less choice, higher prices. Yankee Group’s North America Mobile Carrier Monitor, June 2011. Retrieved from http://web.yankeegroup.com/rs/yankeegroup/images/2011AT %26T-T-Mobile- Merger-Report.pdf