Is there any operator that, in the foreseeable future, can crack the hegenomy of AT&T Inc. (NYSE: T) and Verizon Wireless as the top two wireless carriers in the U.S.?
If there is, I haven't figured out which one it is yet.
AT&T and Verizon's subscriber additions even tend to track each other closely in recent quarters. For instance, Verizon Wireless added 1.3 million retail wireless customers in the first quarter this year, just beating AT&T's 1.2 million net adds in the same period.
Verizon had a total subscriber base of 86.6 million at the end of the first quarter, while AT&T had racked up 78.2 million wireless subscribers by then. The big two's nearest rival, Sprint Nextel Corp. (NYSE: S), has been losing subs recently and ended 2009 with 49.3 million on its books, while fourth-place T-Mobile USA added just 415,000 subscribers in the first quarter.
3:00 PM -- So, it seems unlikely that any of AT&T and Verizon's traditional rivals have a way of adding enough new customers to surpass the big two right now. It is possible, in these recessionary times, that we could see more savage price cuts to wireless services, but smaller rivals such as MetroPCS Inc. (NYSE: PCS) and Leap Wireless International Inc. (Nasdaq: LEAP) seem to have been making the most of the early running in the low-cost market so far.
An upstart like Clearwire LLC (Nasdaq: CLWR), meanwhile, needs years to build up customers, services, and a network to present a viable challenge to the big two. The mobile WiMax challenger may never actually get that far.
There is always the possibility of outside carriers becoming more of a factor in the U.S. market. SK Telecom (Nasdaq: SKM) has been rumored to be sniffing around Sprint in the past, for instance.
Nontheless, in the short-term, I don't see what other operator could be the downfall of this mobile duopoly. In fact, barring antitrust worries, AT&T and Verizon seem better placed to pick off more small carriers to try and extend their customer bases.
Of course, it won't be this way forever. That would be as foolish as suggesting, say, that a run-up on housing prices would continue indefinitely. Still, in the next three to five years -- and likely longer -- AT&T and Verizon seem destined to remain the top dogs of cellular America.
Take a good look at the technological underpinings of Sprint. They are the direct beneficieries of Clearwire's 'wireless ethernet backhaul stratagy'. The deployment and cost of the Wimax buildout are moving VERY rapidly. There will probably be no announcements of what is operable (mobile wimax) for obvious strategic reasons. However, the grapevine is reporting receiving the signal in many, many locations that are not listed in their 'rollout schedule'.
Sprint's capex has been lightened appreciably by shifting it to Clearwire; and, although, we won't see their numbers until Monday morning, I think we're in for a sizable surprise. Boost, from the 'buzz' has sizzled and their wholesale positions with retailers, such as Amazon's Kindle, are proliferating.
The entire closed, 2 year contract, subsidy, business model is dead! With tech cycles shortening by the day, and the 'open hand set alliance' proliferating like rabbits; we're going see a new wave led by Sprint (aka Intel, Google, Cisco, etc.).
Like everybody else, it's just speculation, but if you do some digging, I think you'll find it to be accurate.
Your post could probably rank right up there with past commentators on Penn Central, General Motors ad nauseum. The antiquated 'backhaul infrastructure of AT&T and VZ are based on obsolete T1s. Wireless broadband ethernet links toll the eventual death nell of the 'big two'. In case you haven't heard; change is accelerating, at least according to Einstein!
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