Data Share plans are finally here. After Verizon Wireless had hinted for more than a year that it would introduce data share plans, only AT&T Mobility has been nimble enough or inclined to provide a competitive answer to what Verizon is offering. The other carriers are either strongly entrenched in their current positioning that they would undermine their value proposition, are waiting to see how consumers react to these plans, have been surprised or are living in denial that Verizon is actually doing what they have announced. I hope the number of operators in the surprised/denial camp is small. But what is happening here is that the urban myth about large companies not being able to innovate has been proven once again to be just that, a myth.
What is most surprising is that nobody beat Verizon to the punch in being first to market with a data share plan. Everyone subscribes to the same information sets on customer preferences and trends, has access to roughly the same forecasts on how data will transform the wireless landscape, everyone reads the same newspapers and it has been obvious to all that there is room for a data share plan. How much more lead time can Verizon give about its intentions in order to give its smaller, and nimbler competitors the opportunity to preempt them? The audacity of AT&T being the fast follower and providing their consumers with a share plan but with even more options than Verizon offered. This is another affirmation that actual market competition looks different in reality than it does in the old text books. The small guys are supposed to be the innovators that identify underserved niches and exploit the opportunity, not the big guys. Alas, the wireless sector proves that old assumptions about competition and innovation are just that--old assumptions. Consider that TracFone identified the Lifeline opportunity of expanding free landline phones to wireless and together with its innovative Straight Talk prepaid unlimited talk/text and large data bucket has propelled it to be the fifth largest service provider in the country. Sprint is the fast follower there with its Assurance offer and is growing this segment leaps and bounds from about 6 million subscribers at the end of 2008 to roughly 18 million today.
Aside from being nimble and innovative, it seems to me the real reason Verizon and AT&T have grown larger than their competitors is because of better executive decision-making in the ranks of senior management. Over the duration of its existence Verizon has not made any significant mistakes--you have to admire that kind of executional excellence quarter after quarter. AT&T was brilliant in how it got the iPhone, but underestimated the impact it would have on its network. Its public image took a hit, but people still flocked to their network. By contrast, Sprint's previous management team thought that size was more important than other factors and therefore bought Nextel. As we all know now, that decision almost killed the company. The problems created by that nonsensical decision were so profound that it is only now, seven years after the transaction, that the company is almost in the clear. Another example of failed executive leadership that has constrained the ability of the company to expand in competition with its rivals is the T-Mobile saga. T-Mobile suffered from an extremely risk-averse parent that underinvested in its network for many years, giving the company a and suboptimal marketing position. Unable to sell itself to AT&T, the company is now resolved to actually invest in its network, improve coverage especially indoors, build an LTE network, and realign its spectrum bands with popular phones. U.S. Cellular has suffered from the same under-investment problem and related marketing problems, but they too are finally waking and trying to either catch up or leapfrog their competitors by building an LTE network and revamping their advertising.
Ultimately, it all comes down to the consumer. With subscribers on contract at record lows, the barriers to switching are less than ever. New innovative service providers are entering the market, such as Ting, Republic Wireless, Solavei, with new takes on how to serve a customer further cementing the consumer as king (or queen). Ting charges you only for what you use, Republic Wireless is offering very competitive rates by offloading to Wi-Fi, and Solavei is providing low-cost unlimited voice/text/data. They also have a creative approach to consumer loyalty by sharing the money that otherwise goes to advertising with customers that refer new customers. All of them require customers to pay full price for their unsubsidized device rather without a contract compared to the choice that the large operators are providing, between no-contract unsubsidized devices or receive up to $450 off for the same device in exchange for a two year commitment.
Wireless consumers vote with their feet and appear pretty savvy and informed regarding what they want out of their broadband experience. More and more are preferring the mobile option and wireless broadband providers are stepping up to take on these new demands. Remember, part of competition and choice is that there will be winners and losers--and some choices appeal to some consumers, but not all. That's what choice is all about--especially when wireless broadband customers have the choice between more than a dozen service providers.
Roger Entner is the Founder and Analyst at Recon Analytics. He received an Honorary Doctor of Science from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.