"The first liar doesn't stand a chance," my beau likes to say. The axiom is usually taken to mean that the first person sitting around a campfire telling a total prevarication (After I convinced the bear not to shred me to pieces, I adopted it and took it home as a pet…) is almost sure to be topped by the next storyteller, whose tale will be more creative and outrageous (We eventually taught our pet bear sign language and computer programming and then sent him to Harvard, after which he created the first ursine social media site…).
In my beau's case, he usually utters the saying after he's played a seriously irritating practical joke on me, which I top by playing an even more creative or unexpected one on him. But the adage can also apply to a situation in business, wherein a first mover sets the stage for a rival to copy it and, with some embellishment, offer a similar but better product.
I think we just witnessed that with AT&T Mobility (NYSE:T), which announced its Mobile Share shared-data packages on the heels of Verizon Wireless' (NYSE:VZ) rollout of the nation's first shared-data packages, which it branded as Share Everything.
AT&T was apparently chomping at the bit to initiate shared-data plans, but it let Verizon become the first to belly flop into the shared-data pool and take considerable flack for rolling out a new pricing scheme that initially confused and shocked lots of current and potential customers. Once people had a better grasp of the reasoning behind tiered shared-data offerings--and some even saw that the packages might benefit them--the stage was set for AT&T to make an elegant swan dive into the same pricing pool with a more customer-friendly offering.
The most important differentiator between the two operators' approaches is that AT&T is not forcing anyone to adopt its new shared data plans, whereas Verizon is telling new customers and existing ones who accept a subsidy for a new phone upgrade that they can basically sign up for a shared-data plan or leave.
This factor led lots of current Verizon customers to incorrectly believe they were being forced onto new pricing plans, and more than a few Verizon customers I spoke with were absolutely petrified that they were going to be greeted by huge bills immediately after the operator's shared-data plans were implemented. Verizon made a gutsy move by being the first to launch shared-data plans, but its marketing effort in unveiling the new pricing clearly left a lot to be desired.
According to Jan Dawson, chief telecoms analyst at Ovum, Verizon "made several key missteps and turned what should have been a good news story into a bad news story, leaving the door open for AT&T and other carriers to provide a more compelling offering. AT&T seems to have learned from Verizon's mistakes and is giving customers more options and a simpler charging structure."
In addition to awarding AT&T kudos for not forcing customers into its new plans, Dawson also salutes AT&T for offering simple overage charges, which, at a flat $15 per gigabyte, compared favorably against "Verizon's confusing two-tier overage charges."
AT&T has been a beneficiary of Verizon's first-mover mistakes, as initial negative reaction to AT&T's new plans appears considerably more muted (and it's important to note that both operators received positive as well as negative reviews of their new plans). In hindsight, Verizon's marketing team probably wishes it had engaged in efforts to more thoroughly educate the mass consumer media before launching its revolutionary new pricing plans or had, at the very least, sent out some reassuring SMS messages to its existing customer base when the shared-data plans were first announced.
This summer's introductions of shared-data pricing in the U.S. market are a bellwether and will surely lead to some fascinating case studies regarding the best and worst ways to unveil new service packages. Business school students should have a bear of a time sussing out what could have, and should have, been done by Verizon as well as AT&T.--Tammy