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After years of ignoring competition, Verizon is forced to compete for customers

Previously, Verizon has decided not to compete against rival carriers on a consistent basis.
By
December 10, 2014
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Over the last few years, T-Mobile has forced AT&T to make some radical changes (to AT&T that is) to their contract lengths, phone subsidies and data allotments. Granted, not all changes by AT&T were permanent or offered to everyone. But one thing that T-Mobile has not done yet is push Verizon off their throne and force them to compete with T-Mobile on a substantial and consistent basis.

That isn’t to say that Verizon has not made any changes. After T-Mobile made a variety of plan changes earlier this year, Verizon eliminated their $35 activation fee for a limited time. When AT&T and T-Mobile made substantial increases to the amount of data included with their large bucket plans this year, Verizon made small changes of their own.

But in Verizon’s eyes, there is no need to dive head first into a race with either T-Mobile, AT&T or Sprint. They lead most customer satisfaction surveys for wireless service and are generally considered to have the best LTE network in the country. So, Verizon saw no need to substantially challenge competitors and instead kept their premium on consumers.

Revenue-of-Carriers-Income-Verizon-AT&T-T-Mobile-Sprint

But in the last year, Verizon has had to calm investors worries about whether this strategy is smart going forward. In February of this year, Verizon spoke to ComputerWorld after AT&T had just responded to T-Mobile by slashing prices for shared data plans with families and businesses. Verizon claimed that they saw no need to drop prices due to their network being considered the best. But in April of this year, Verizon reported first-quarter results that included lower-than-expected net new customers and a 20% decrease in postpaid customer additions as compared to the previous year.

Now, fears are again creeping up about whether Verizon should move off this strategy. On Monday, Verizon warned investors that their profits may be smaller-than-expected at the end of the year due to “heavy promotions from rivals.” The last month has shown why Verizon should be worried. Sprint is going national with their “cut your wireless bill in half” offer, while AT&T has increased data amounts for most plans without raising prices. Then there is T-Mobile’s new unlimited everything family plan for $100 and new unlimited business plans.

Unfortuately for consumers, I suspect that Verizon will continue their trend of slight changes rather than any substantial move against rival carriers.