The battle of the ad campaigns between AT&T and Verizon has heated up as we head toward the holiday buying season. AT&T’s ads have asserted they have the best 3G network, Verizon’s the broadest coverage, each twisting the virtues of their respective networks to the exclusion of their competitors’. This battle is not a fight over advertising agency creativity. Bandwidth is a fundamental requirement to provide a competitive user experience for web-enabled devices including the iPhone and Motorola DROID. Coverage is a fundamental attraction to many subscribers.

As the competition for subscribers is trending toward higher bandwidth, coverage will remain a major factor. Coverage is likely to grow in importance to consumers as new devices like DROID blur the advantages of the iPhone in driving sales of devices and subscriber net additions.

This issue has elicited Cellco Partnership d/b/a Verizon Wireless to file a lawsuit on July 27th, 2009 against AT&T, seeking a declaratory judgment that Verizon ads are “truthful, accurate, and substantiated, and do not violate the Lanham Act.” This pre-emptive move appears intended to set the stage for the blitz of advertising that has followed. 

The Verizon advertising plays off of Apple’s “There’s an App for That” campaign that has been burned-in to the consciousness of the industry by the fact that AT&T has an exclusive agreement to provide the iPhone. 

AT&T’s more recent lawsuit was quickly answered by the response from Cellco Partnership d/b/a Verizon Wireless, on November 16th, 2009, asserting that AT&T is not entitled to “extraordinary and drastic remedy of a TRO prohibiting Verizon from showing five television advertisements” and further, that Verizon’s advertising is, in essence, truthful:

“For well over a year, the battle lines in wireless communications have been drawn around the ‘3G’ (third generation) wireless data capabilities of each carrier, as measured by coverage, speed, and reliability… Despite the far smaller size of its 3G network, AT&T has spent tens of millions of dollars making its 3G network, which it dubs the ‘Nation’s Fastest 3G Network,’ the centerpiece of its national advertising since at least the summer of 2008… Remarkably, AT&T admits that the 3G coverage maps — the one thing that is common to all five ads — are accurate and that the ads’ express statement that Verizon has ‘5X More 3G Coverage’ than AT&T is true. (See First Amended Complaint (‘Am. Compl.’) ¶ 88.) Nonetheless, AT&T asserts that Verizon’s ads about 3G coverage are ‘false and misleading’ because they allegedly imply a message that confuses consumers regarding AT&T’s non-3G coverage.”

Why Verizon is Pressing Boldly

Verizon is preparing to roll out LTE service, which will greatly enhance the company’s broadband capacity based on exploitation of recently licensed 700 MHz spectrum. This will change the competitive landscape significantly: Verizon has the broadest band of spectrum among operators deploying in the ‘beachfront property’ 700 MHz, 22 MHz across the United States. We view the current spate of lawsuits as preparation for the battle that will ensue as LTE is launched. Verizon will stress both coverage and bandwidth against AT&T. Against their hopeful WiMAX nemesis, Clearwire, Verizon will stress their coverage trump card. 

Coverage, speed (bandwidth), and quality are leading factors operators bring to the table. Mobile devices and applications are the emerging market drivers. Verizon’s major advantage is coverage and they are boldly pursuing this through ads that press to the limits.

For reference information see: http://www.agglom.com/set/74925/AT_T_and_Verizon_Battle_Over_Pivot_Points_in_Market_Demand_

As well as Maravedis’ recent report, “Sizing up the Competitive Opportunities for Verizon and Clearwire” by Robert Syputa, (November 2009).

For more information you can contact the author at robert@maravedis-bwa.com

Copyright © 2009 by Maravedis Inc. All Rights Reserved.
No reproduction without consent.



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