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Verizon hit upon an ingenious marketing tactic when it started publicizing the new Droid handset. The company had been sitting idly by while AT&T made headlines — and millions — selling iPhones the past two years. But after doing a bit of research, they noticed that AT&T's 3G coverage wasn't as thorough as the company claimed.

Now that they have a Google smartphone in their catalog of phones, Verizon decided to go after AT&T's network quality, with comparative maps of their coverage. AT&T took none too kindly to the effort, and quickly responded with a lawsuit.

This week, AT&T dropped its case against Verizon. It appears that Verizon has won this round of the cellphone wars. But when it does get its hand on the iPhone, there's no guarantee that Verizon will have any more success delivering coverage than AT&T.

AT&T's exclusive contract with the iPhone should be up in the next few months. And when Verizon starts selling the iPhone, the data demands of the product could easily sink their network performance to below AT&T levels.

But Verizon is betting that its network can take the street. The company thinks that network quality is going to be the most important — if not the only thing — that matters for cellphone providers pretty soon. If phone manufacturers keep producing products and marketing them directly to the public, that future could get here pretty soon. If Verizon can deliver on its promise, the company may have hit upon a winning strategy for the long haul.

Part of what makes Verizon's "There's a Map For That" ads so ingenious is their mischevious messaging. Verizon may have better 3G service in more places than AT&T right now, but the iPhone is a notorious data suck on AT&T's network capacity.

The iPhone has been both a blessing and a curse for AT&T exactly for this reason. The more iPhones the company sells, the more money it brings in. But the more iPhone users that exist, the harder it becomes to provide them with reliable service.

And while Verizon has more subscribers than AT&T, (89 million to AT&T's 81.6 million), thanks to the iPhone AT&T is bringing on more customers at a faster rate than Verizon. They brought in just over a million new-contract subscribers last quarter compared to AT&T's 1.4 million.

But AT&T is struggling to accomodate all of those new customers.

Which means that putting up a favorable coverage map is exactly the kind of thing you can do when you're a cellphone provider that currently doesn't sell the world's most exciting device. And the approach is working. According to real-time sentiment watcher Twendz, the terms "AT&T" and "map" on Nov. 24, came out with 43% neutral conversations, 41% negative and 16% positive. "Verizon" and "map" came back with conversations that were 39% negative, 39% neutral and 23% positive.

And Verizon is betting that when it does get the iPhone, it will be able to handle the data surge. Speaking at the ANA Masters of Marketing conference last month, Verizon CMO John Stratton says that his company's focus on network reliability often causes Verizon to be late to market with products.

"We did this making a conscious decision that first and foremost we'd made a commitment to our customers around the quality and reliability of the service we provide. Until the device passed our high standards of testing, we would not put it on the network."

In a market scrambling to bring customers the most exciting and newest cellphones at any given moment, that can be a real weakness. But Verizon thinks that the network, and not devices, are becoming the most important factor in the cellphone business.

Stratton told the audience at ANA that Apple's launch of the iPhone created a separation between the device and the underlying network that supported it. "Over the course of time, customers began to disassociate that the network was still part of the equation."

In less than 18 months, the whole smartphone market grew to over 40% of sales for carriers. But as cellphone creators start marketing their own devices, carriers are likely to become less important. When that happens, network quality will become the only distinguishing factor among carriers. Says Stratton:

"We actually believe that we're beginning to see a repeat of what happened back at the beginning of this story in the year 2000. Customer demand is starting to put tremendous stress on the underlying data networks. Some carriers are struggling to keep up with that demand. As a result, customer satisfaction... is beginning to feel great pressure. We need to remind the market that a cellphone is only as good as the network it's on. And so that's what we're working on now."

By putting the emphasis on AT&T's shoddy coverage, Verizon can both distract from the fact that they don't sell the world's most popular smartphone and warm consumers to their offerings once they do.

Karl Barnhart, managing partner at CoreBrand, tells AdAge:

"The genius of Verizon's strategy is the insight that consumers don't know the difference between 3G or any other coverage. All consumers know is that they aren't happy with AT&T's service."

Meghan Keane

Published 4 December, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

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Chip

The author of this article does not understand the maps that Verizon used in it's ad campaign.  Those maps show WHERE 3G coverage exists for each network.  It does NOT show which network is better across the US. The number of iPhones on the AT&T network has nothing to do with whether or not 3G is available in an area.  All of that white space in the AT&T map? You cannot get 3G coverage there - there is no 3G technology on those AT&T towers.

The map even says 'MORE' coverage, not 'BETTER'.

Even if both networks suddenly had the exact same number of iPhone running on them, the maps would not change.  AT&T would have to add 3G coverage (by adding hardware to their towers) in order to change these maps.

over 6 years ago

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Dave

This is a flawed argument, because it rests on a faulty premise, and that is that the author is buying into these maps.

I'm personally dissatisfied with AT&T as a provider, but would sooner trade my car than go from my iPhone to Verizon. It's the product. And I'd cheer like hell to see Verizon get the iPhone, simply to relieve the pressure off of AT&T's network, if that's truly the cause of the problems (I suspect this is the case, with 3 of every 4 phones sold by AT&T an iPhone--that's something Verizon can't claim)

But I'll tell you where this cute (and yes, I'll admit it's graphically effective) campaign falls short, and AT&T is trying to respond: The FACT you can't make a call AND send data on Verizon's tired CDMA technology was something I was unaware. Now that I am, that feature is critical to me. 

I am quite certain anyone who has enjoyed their iPhone for any amount of time would agree, and probably why T-mobile will get the phone before VZW does: Phone and Data use go together.

over 6 years ago

Meghan Keane

Meghan Keane, US Editor at Econsultancy

Chip, That doesn't change my argument — that AT&T's coverage is suffering from the increased data requirements of all of the iPhone owners it has. If Verizon's network can better handle all of the smartphone useres that are coming in the next few years, they'll be ahead of the game.

Dave, I'm a bit confused with your comment, because it sounds like you agree with me but your tone suggests otherwise.

over 6 years ago

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Mike Stenger

I'm personally all Verizon. It seems the biggest problem with AT&T is that they're getting all these new customers & like Meghan said, the coverage is suffering from the increased data requirements. Everyone I've talked to who has AT&T has issues with the coverage. Sometimes it's bad and sometimes it's alright but not the best.

I'm sure AT&T has the money to upgrade their infrastructure. It's like launching a web host and as you gain new customers, you still stick to the same amount of servers. Eventually, there will start to be problems and that's what we're seeing right now.

over 6 years ago

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Michael Kay

I've been using 3G (EVDO) cards for several years throughout the country.  I have two Verizon cards & two Sprint cards, and tested an AT&T card in the spring of 2008.  I can tell you conclusively, that Verizon has the best 3G coverage in the entire USA with a close second by Sprint when considering speed and coverage.  AT&T's upload speed was amazing but their download speed sucked bigtime.  I returned their card and cancelled the contract. (I'll try it again in 2010.)

I think the real difference that few users know is that 3G is not a single technology.  It started with a slower standard called "Rev 0" and evolved into "Rev A".  Sprint & Verizon use "Rev A" on their towers.  As of last spring, AT&T was still using "Rev 0" on it's towers.  Even if a card (or phone) is "Rev A" capable, that doesn't guarantee that the towers are.

In 2009, Sprint launched 4G (WiMax) service in some select markets through a partnership with Clearwire.  In those very limited markets (which are expanding), Sprint's 4G download speeds are as much as 5-10 times faster than 3G coverage.  I've tested it in Baltimore and it was 5 times faster there.

Verizon intends to launch it's 4G (LTE) service in 2010, and (based on previous experience) will likely upgrade it's towers quickly to support wide distribution of its 4G service. 

AT&T's 4G (LTE) service is not expected until 2011 - 2012.  Need I say more?

BTW... the number of users on one tower can definitely affect upload & download speeds.  Each tower has a hard line to a central location that can only handle a certain amount of bandwidth.  The more users, the more sharing of the bandwidth that has to occur.  Thus it appears to users that the network service has slowed down.

over 6 years ago

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Patrick

I'm with Chip. Quit wasting you breath on overloaded at&t towers. Its a foolish argument. Verizon has 5 times larger network. More towers equals more coverage. That's simply what the advertisements were about. PERIOD

almost 6 years ago

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