2010
Competition in the Wireless
Telecommunication Industry:
The Strategic Situation at Verizon Wireless and AT&T
Taylor Boyd
Nicole Teibel
Trey Broome
12/1/2010
Table of Contents
Part I: The Rivals............................................................................................................................... 3
Verizon Wireless VS. AT&T ..................................................................................... 3
Part II: Opportunity ........................................................................................................................ 4
Wireless Telecommunications Industry .................................................................. 4
Geographic Demand .............................................................................................. 6
Part III: Industry Analysis........................................................................................................... 7
5-Forces Analysis.................................................................................................... 7
Conclusions about the 5-Forces ............................................................................ 11
Key Success Factors (KSF) ..................................................................................... 12
KSF and Relative Defense against High-Power Threats to Profitability ................. 16
Part IV: Strength Assessment ................................................................................................. 17
Key Success Factors: Raw Data ............................................................................ 17
Key Success Factors: Distinctive Competency Scores ............................................ 17
Verizon Wireless: Most likely to Sustain a Competitive Advantage .................... 188
References………………………………………………………………………………………………19
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Part I: The Rivals
Verizon Wireless VS. AT&T
Verizon Communications and AT&T are two publicly traded rivals that compete in a multitude of
industries and offer varying products and services dependant on the industry, for the purposes of this
report the industry to be discussed is that of Wireless Telecommunications Industry. Particular discussion
will be limited to the Wireless Telecommunications industry and the related wireless devices and their
accompanying services on which Verizon Wireless and AT&T Mobility compete in this industry.
Cellco Partnership was incorporated in Delaware in 1994, and does business under the name
Verizon Wireless. The partnership consists of 55% ownership by Verizon Communications Inc. and 45%
ownership by United Kingdom based Vodafone Group Plc (Verizon Wireless 10-K, pg. 2). The corporate
address of this partnership is One Verizon Way, Basking Ridge, New Jersey 07920. While both Verizon
Communications and Vodafone compete in a vast array of industries which vie to deliver communication
services to subscribers such as Internet and Land-Line, the subsidiary, Verizon Wireless, is the company
used to compete in the Wireless Telecommunications Industry. The goal of Verizon Wireless is to, “be
the market leader in providing wireless voice and data communication services in the United States”
(Verizon Wireless 10-K, pg. 4).
AT&T Mobility is a subsidiary of AT&T Incorporated. AT&T Inc. was incorporated in
Delaware in 1983. Their corporate executive offices are located at 208 S. Akard St., Dallas Texas, 75202
(AT&T 10-K, pg. 1). AT&T Inc. operates in various market segments by offering various products and
services such as: wireless communication, long-distance services, data/broadband and Internet services,
managed networking, telecommunications equipment, and video services. However, for financial
reporting purposes, AT&T operates in four segments: Wireless, Wireline, Advertising, and Other (AT&T
10-K, pg. 3). According to AT&T’s Annual Report their Wireless segment, “is our fastest-growing
revenue stream and we expect to deliver continued revenue growth in the coming years” (pg. 42).
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The two competitors, AT&T and Verizon Wireless hold a commanding lead over all other
companies in the Wireless Telecommunications Industry. According to the Standard and Poors (S&P)
Industry Survey, Verizon Wireless and AT&T hold a combined 64.1% of the total wireless subscribers
(pg. 2).
Part II: Opportunity
Wireless Telecommunications Industry
The past five years have been an extremely prosperous period for the Wireless
Telecommunications industry, as the industry is in its growth stage experiencing strong consumer
demand. FCC reports have shown that in the period from 2005 to 2009 wireless subscribers have
increased by 77.7 million, “this growth in subscriber numbers has contributed to the estimated 4.6%
annual increase in revenue since 2005,” (IBIS World). IBIS World also states that this industry is
predicted to see further growth in 2010.
Fierce competition has prompted increased technological innovation and new product
development. Due to consumers readily adopting these new innovative products being offered by
wireless providers such as AT&T and Verizon Wireless, these companies have seen greater revenues and
increased margins. As a result of the positive earnings these companies have seen, they are then in turn
able to offer lower prices, which has established product pricing in this industry as a factor that contribute
to a company’s competitive advantage. IBIS world states that “increased scale and greater consolidation
have ultimately improved the efficiency of this high fixed-cost industry and ensured healthy profits and
consumer benefits,” further illustrating the recent success of this industry.
GROWTH
As a whole, the Wireless Telecommunications Industry has seen extensive growth in recent years.
IBISWorld’s Industry Analysis states that since 2005, “consumers have become increasingly dependent
on cellular phones to meet their communication needs,” and, “a significant number of consumers have
disconnected their land-line services altogether and rely solely on their cell phones for voice and
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messaging services” (pg. 5). Due to this large decline of subscribers in the Wireline market, it seems only
appropriate that competing companies specifically tailor their product offerings to meet consumer demand
for an all encompassing personal communication device.
INNOVATION
Companies originally competed on the attractiveness of their pricing plans, the amount of minutes
available for calls, and text messages users can send; however, a new aspect has become a main focal
point for Wireless Telecommunication providers: enter the smartphone. Due to, “the proliferation of new
wireless applications, and higher-end operating systems such as Android and iPhone OS… The wireless
industry is on the verge of significant changes…” (S&P Industry Survey, pg. 1). On the second page of
their Form 10-K, AT&T cites their exclusivity deal with Apple’s iPhone as an area where they expect to
see continued growth in their customer base. This touches on an important area on which providers will
now begin to compete: operating system offerings. The current major players in operating system market
are Google, which offers their open-platform Android OS, and Apple, which offers the iPhone OS. (The
competition between these two operating systems alone could be the basis for a strategic analysis, but for
the purposes of this report it will not be discussed in depth). These two operating systems account for
84% of United States smartphone web traffic (S&P Industry Survey, pg. 18). S&P’s Industry Survey
goes on to bring to light an interesting idea: “Traditionally, subscribers chose a phone and the operating
system followed. However, we believe the increasing adoption of the Android open operating system
could challenge this notion” (pg. 18). With so many consumers now in the market for a phone which
meets these needs, “service providers have aggressively pursued the latest smartphones with bigger
screens and faster data speeds, both to draw new subscribers and to retain existing ones on their
networks” (S&P Industry Survey, pg. 1).
COMPETITION
The competition in the Wireless Telecommunications Industry has intensified over recent years.
The four largest wireless carriers now control more than 90.0% of industry revenue. This is primarily due
to the increase consolidation that has occurred within in the wireless communications industry. “Industry
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consolidation has made it more difficult for small and regional carriers to be competitive. Difficulties for
these carriers include securing subscribers, making network investments, and offering the latest wireless
phones necessary to compete in this dynamic industry,” (IBIS World).
Geographic Demand
Geographic Area with Greatest Demand:
United States
Amount of Demand in 2010:
$193.6 Billion in Revenue
Growth in Demand from 2005-2010:
4.6 % Growth in Revenue
The geographic area with the largest demand in the Wireless Telecommunications Industry is the
United States. This is due to the face that there is low globalization in the industry. IBISWorld states that,
“The overwhelming majority of wireless revenue is generated
on a national basis. International revenue is sourced from
Figure 1: Distribution of Establishment Vs.
Population in the US
roaming termination charges, but these revenue sources
account for much less than 25% of total revenue” (Industry
Analysis, pg. 29). It is for this reason that they point out that,
“At this stage, no real data is available with regards to the size
of the international trade component of the industry.”
IBISWorld states regarding the geographic demand in
the United States that “the geographic spread of the Wireless
Telecommunications Carriers industry follows the nation’s
demographic profile, in particular its population density.
Conventional wisdom would suggest that establishment shares correlate closely with population shares
given that these areas provide bigger potential markets.” In this industry geographic demand is dictated by
the population of each region in the US, as shown in Figure 1.
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Part III: Industry Analysis
5-Forces Analysis
THREAT OF SUPPLIERS
An important aspect to consider when measuring the threat of suppliers to the profitability of a wireless
telecommunications provider is the specified service the supplier is being used for. Most providers have
diverse infrastructure already in place to manage their own networks; however, recent innovations in the
marketplace have the ability to appropriate the wireless provider’s profits. In a recent Forbes article,
Darcy Travlos states that, “The very phones that increase average revenue per customer do so at the
expense of the carrier's analytic capabilities. If they don't proffer solutions, carriers could quickly become
dumb pipes simply delivering innovative applications from other companies” (How Wireless Carriers
Recapture the Market). The new and innovative phones, which have been driving profits in recent years,
are creating problems for providers when they attempt to capture relevant market data. The logic behind
this problem is simple: “While smartphones' features encourage greater usage and higher revenue per
subscriber, they often bypass the carrier's browser and therefore the carrier's ability to analyze and control
data usage” (Travlos, pg. 1). The real winners in this situation are the suppliers whose networks are being
flooded with real-time, market data on which they can use to broaden their product offerings.
However, there are preventative measures in place to prevent suppliers from forward integration,
effectively stopping the makers of cell phone hardware from venturing into the realm of wireless service
providers. Wireless Telecommunication providers are able to supply subscribers with their services via
the use of radio frequency, using differing amounts of bandwidth to create their “spectrums.” Currently,
the Federal Communications Commission (FCC) is the entity which makes laws and promulgations about
how bandwidth can be used and sold. However, in the market place today the property rights about
spectrum licenses are very unclear, and laws prevent “spectrum licenses to be competitively bought and
sold” (The Spectrum Wars, pg.1). The current structure of licensing does all but give major wireless
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services providers a monopoly on the industry. It is for both these reasons that we believe the threats of
suppliers to the profitability of a wireless service provider are moderate.
THREAT OF BUYERS
The four main players in the Wireless Telecommunication Industry are AT&T, Verizon Wireless,
T-Mobile, and Sprint (IBISWorld Industry Analysis, pg. 5). All of these players are attempting to lock in
as many subscribers to their service as possible, which would normally indicate competition based on
lowest price and give buyers high power. However, the Wireless Telecommunication Industry has a
unique safeguard in place to attempt to limit the threat of the average consumer: one and two year
contracts. The amount of services which all providers offer customers today are vast and at times even
free (specifically the move from cellular to digital service); therefore, “In order to offset the cost of
subsidized or free digital handsets, carriers sell these services through contracts that extend for one or two
years”(S&P Industry Survey, pg. 22). The real competition takes place between service providers when
they attempt to lock customers into contracts. However, an interesting phenomenon has been occurring in
the industry. In the past, high switching costs have prevented buyers from moving to another carrier, but
recently Darcy Travlos believes that the appeal of cell phone applications will be the area where buyers
are won or lost. Travlos also states that, “a significant number of customers have already been willing to
change from a carrier with perceived better service to a carrier with a more interesting smartphone” (How
Wireless Carriers Recapture the Market). This phenomenon brings in the idea of customer churn.
Churn is another measure that is used to evaluate the level of buyer power in this industry. The
churn rate it is the percentage of current customers that a provider looses over a given period of time.
Churn reflects consumers’ desire and ability to change service providers to better meet their wireless
needs. IBISWorld states that, “Most players experience an average monthly churn rate of roughly 1.5%
to 3.5%,” indicating that competition is very high (Industry Analysis, pg. 26), which results in a high
percentage of consumers that are switching between providers. High churn rate indicates customers can
and will switch easily (IBISWorld), and due to the industries high churn rate, the threat of buyers is high.
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THREAT OF SUBSTITUTES
The threat of substitutes to the profit of a company deals with the value proposition that their
particular product or service offers. The current companies in the market are in the unique position of
offering a product which can be used as a telephone, a computer, a messaging device, and a GPS. From
the standpoint of customers, products from this industry are offering buyers the best possible value
proposition in the modern market. It is for this reason that customers have continued to disconnect their
Wireline services with Telecommunication providers (IBISWorld pg. 5). Standard and Poors also makes
an interesting point about companies that also have strategic business units which sell Wireline products
to customers when they say, “As a disadvantage, telcos carry heavy overhead costs, and they have huge
investments in established infrastructure that will be cannibalized by emerging technologies” (Industry
Survey, pg. 13). This the reason which we believe makes the threat of substitutes inherently low: the fact
that modern day cell phones are the substitutes, and can be used as a multitude of different devices in one
unique package.
THREAT OF ENTRY
The Wireless Telecommunication Industry is currently regulated by the FCC. In Verizon
Wireless’ Form 10-K they state that, “To use the radiofrequency spectrum in the United States, wireless
communications systems must be authorized by the FCC to operate the wireless network and mobile
devices in assigned spectrum segments, and must comply with the rules and policies governing the use of
the spectrum…” (pg. 13). Due to this heavily regulated environment, it is extremely difficult for new
entrants to gain enough radiofrequency spectrum to allow them to compete with already entrenched
companies. This regulation has created a situation where, “before a company can even establish
compliant services, it must gain a license and win spectrum for delivering services” (IBISWorld Industry
Analysis, pg. 6). AT&T points out on their Form 10-K that the licenses are issued for a specific amount
of time, typically ten years, at which point the license must be renewed (pg. 6).
However, the FCC and its licensing practices are not the only barriers stopping new entrants.
IBISWorld points out that, “The cost associated with building base stations, towers and other network
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infrastructure is exorbitant, particularly for those seeking national coverage in which case it runs into
billions. The capital intensiveness of this industry acts as a deterrent to prospective entrants” (Industry
Analysis, pg. 28). The heavy regulation, limited availability of spectrum licenses, and the extremely high
fixed costs make entry into this industry very hard, and it is for this reason we feel there is a low-power
threat to profitability.
THREAT OF RIVALRY
The threat to profitability due to the force of rivalry is extremely important to monitor in the
Wireless Telecommunication Industry. There are four major players in the marketplace which combine
to account for 85% of the market share (IBISWorld Industry Analysis, pg. 5). IBISWorld also predicts
that the growth in subscribers will grow annually at a rate of 5.7% and, as noted above, the fixed cost to
participate in this industry are very large. AT&T is under the opinion that, “It is widely recognized that
the wireless industry in the United States is characterized by innovation, differentiation, declining prices
and extensive competition among handset manufacturers, service providers and applications” (Form 10K, pg. 14). This allows us to infer that due to their extensive competition with other service providers, the
power threat to profitability of rivalry is high.
Furthermore, competition between rivals is highlighted through their use of contracts to lock-in
subscribers. Verizon Wireless, for example and similar to most competitors, has the policy of, “an early
termination fee that decreases after each full month that a customer remains on their contract and a phone
upgrade credit every two years, provided that the customer signs a new two-year contract” (Form 10-K,
pg. 12). The rivalry between service providers is based on their competition to sign and contract new
subscribers who must pay termination fees when they want to switch to a different service provider. It is
important to note, however, that recent trends suggest customers will switch providers when they find that
one has more unique product offerings than the other (Travlos, pg. 1).
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Force
Power Threat to
Profitability
Explanation

Suppliers
Moderate



Buyers
High



Substitutes
Low


Threat of
Entry
Low



Rivalry
High


New technology made by suppliers helps to give them more
information, and allows them to dictate their own prices
Suppliers are prevented from entering the market due to the
spectrum licensing
Four major players in the Industry
Switching costs are not adequately stopping buyers from
switching providers
Buyers will switch when other companies have more
differentiated applications
Monthly churn rate is very high
Products from this industry offer buyers the best value
proposition, and allow users to have a single device that
takes the place of many
Many customers have begun to drop their subscriptions to
Wireline services and have kept only a contract with their
Wireless Service Provider.
Heavily regulated by the Federal Communications
Commission
Limited availability of spectrum licenses and bandwidth on
the open market
Extremely high fixed costs associated with building the
necessary infrastructure
More than two major industry players of roughly the same
size
Fixed costs are high, and all competitors have the ability to
service demand
Heavy competition to attract subscribers and lock them into
contracts
Conclusions about the 5-Forces
Due to 2 of the 5-Forces being low power threats to profitability, the expected profitability of the
average seller with now unique resources or capabilities will be about equal to the cost of capital. In this
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situation, Profit is equal to Quantity Sold multiplied by Average Selling Price, and then reduced by
Internal Costs (Profit = (# Sold * Avg. Price) – Costs).
Key Success Factors (KSF)
An important step for businesses to take in determining their expected profitability is to
determine the competencies and resources necessary to achieve and maintain high levels of sales,
justify higher average selling prices than rivals, and reduce their internal costs of operations.
Paraphrased from Greg Young’s definition, Key Success Factors are specific resources and
activities any competing company must be good at if they are to be profitable in satisfying
demand while also defending against high-power competitive threats to profitability. They are
the factors which affect an industry competitor’s ability to be prosperous in the marketplace.
These factors are attributes, resources, competencies, capabilities, and market achievements that
denote the differences between strong and weak market competitors.
In the Wireless Telecommunication Industry there are a variety of Key Success Factors
for providers to choose from when looking to defend against high-power threats to profitability,
and in turn strengthening their competitive positions. In this industry six KSFs come to mind:
economies of scale, exclusivity of product, level of network coverage, technological innovation,
strategic alliance outside the industry, and the customer satisfaction.
ECONOMIES OF SCALE
In the past 5 years, competition between wireless carriers in the United States has heightened.
The depth of the competition is described in the IBIS World Industry Report stating “the impending
market maturity has propelled major players to establish a competitive position from which to defend
their subscriber base.” A company’s subscriber base plays an instrumental role in a company in this
industry’s economies of scale as a key success factor. The larger a company’s subscriber base, the larger
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their economies of scale, and the easier it becomes for a company in this industry to use this economies of
scale as a key success factor to defend their market share, and profits.
Economies of scale is achieved in this industry through increase the geographic areas that
services are provided to, or as IBIS world states by “increasing their geographic footprint” (IBIS World).
A large economy of scale is achieved by addressing many different market segments with similar
products, selling to these segments at higher volumes allows operations on a large scale obtaining positive
effects on a products cost. A provider’s economy of scale allows them to achieve a competitive
advantage in the pricing aspect over competitors. “Merger and acquisition activity has decreased
enterprise numbers since 2005, but the increasing size of industry participants has brought about
economies of scale and made the industry more efficient” (IBIS World). Increased numbers of mergers
and acquisitions in recent years have also contributed to increase economies of scale in the wireless
industry “Merger and acquisition activity has decreased enterprise numbers since 2005, but the increasing
size of industry participants has brought about economies of scale and made the industry more efficient”
(IBIS World). Economies of scale has become a necessary key success factor in this industry, as
increasing and maintaining a large subscriber base will be essential for a company to obtain a competitive
advantage and compete effectively as this industry approaches maturity. The largest providers in this
industry will have the greatest competitive advantage as they will have the greatest economies of scale.
Economies of scale are measured by costs over total assets.
EXCLUSIVE PRODUCT CONTRACTS
One of the main ways that wireless service providers compete in the Wireless
Telecommunications Industry is through achieving a key success factor through exclusivity of products
offered by differentiating their products from that of their rivals.
IBIS world states that “Product innovation is a critical competitive weapon within the cell phone
space. This is because the commercialization of new technologies can be incredibly valuable in boosting
usage, bolstering margins and attracting new customers” (IBIS World, pg.27). Offering new and
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innovative products has become increasingly important for wireless companies to not only compete, but
survive in this industry. This is mainly due to wireless product life cycles being very short. “Innovative
product bundling is also becoming a more significant competitive point as players offer integrated
combinations of the latest products and services to encourage customers to become multiproduct users,”
(IBIS World, pg. 27). One example of product exclusivity in the Wireless Telecommunications Industry
is AT&T’s exclusive power to provide service for Apple’s iPhone. The S&P Industry report notes that
“AT&T got an incredible advantage over the rest of the field with an exclusive deal to sell, first, the
revolutionary iPhone, and then the 3G iPhone” (S&P Report, pg. 2). Likewise, Verizon Wireless also
offers exclusive products such as Smartphones that run on Google’s Android technology and the Skype
mobile application. Because the Wireless Industry is highly competitive, providers must constantly
differentiate themselves from rivals by carrying exclusive products to create and sustain a competitive
advantage.
PRODUCT INNOVATION
IBIS world states that “Product innovation is a critical competitive weapon within the cell phone
space. This is because the commercialization of new technologies can be incredibly valuable in boosting
usage, bolstering margins and attracting new customers.” Offering new and innovative products has
become increasingly important for company’s in this industry to not only compete, but survive in this
industry. This is mainly due to wireless product life cycles being very short. “Innovative product
bundling is also becoming a more significant competitive point as players offer integrated combinations
of the latest products and services to encourage customers to become multiproduct users,” (IBISWorld).
STRATEGIC ALLIANCES
In a strategic alliance, two or more organizations share resources, capabilities, or distinctive
competencies to pursue a defined business purpose. In the Wireless Telecommunications Industry,
strategic alliances are important key success factors on which companies in this industry seek to achieve
to obtain a competitive advantage.
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IBIS World states that “It is important for wireless carriers to develop strategic alliances with
leading businesses in supplier and buyer industries. Supply-side relationships are critical to providing
competitive service offerings and the best devices.” The importance of strategic relationships can further
be outlines in Verizon Wireless’ Annual Report in stating “one of our primary business strategies is to
build and expand the capacity and coverage of our digital network so that we may provide sufficient
capacity and seamless and superior coverage nationally on a cost effective basis” (Verizon Wireless 10-k,
pg. 4).
NETWORK COVERAGE
The importance of network coverage as a key success factor in this industry can be seen is
illustrated by IBIS world in stating “geographic coverage has increased in importance as witnessed by the
scramble among players such as AT&T Mobility, Verizon Wireless and T-Mobile USA to achieve
maximum US coverage.”
Firms achieve network coverage as a key success factor by effectively using their resources to
enlarge their geographic footprint. The recent trend to increase Network Coverage is seen through the
increased mergers and acquisitions in the industry. Firms merge to obtain greater resources, and then
work to effectively utilize these resources to obtain the greatest coverage. Greater network coverage can
also be seen as a way to achieve greater economies of scale and increased efficiencies on which a
company can obtain a competitive advantage
CUSTOMER SATISFACTION
The S&P Industry report identifies that “quality of service is a key ingredient in
telecommunications services. Because the market has become more competitive in recent years, customer
satisfaction and retention are primary drivers in fostering long-term revenue growth.” Customer
satisfaction, keeping customer’s happy, is an important competitive weapon in obtaining and maintaining
a loyal customer base. Customer satisfaction can be achieved through greater emphasis on service
reliability and problem resolution (IBIS World). In Verizon Wireless’ Annual Report the company
identifies that network coverage is another key factor in determining customer satisfaction().
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IBIS world states that customer service is paramount in achieving customer loyalty through
reduced churn rates (maintaining subscriber numbers). The churn rate is the percentage of current
customers an operator loses over a given period of time, and this will be the basis in which we will
measure customer satisfaction in this industry. The lower the churn rate, the greater the customer
satisfaction a company has. The S&P Industry Report state that “most players experience an average
monthly churn rate of roughly 1.5% to 3.5%,” indicating that competition is very high, and this displays
the importance of customer satisfaction (low churn rates) as a key success factor.
KSFs and Relative Defense against High-Power Threats to Profitability
The key success factor of customer satisfaction is extremely important to be good at if a company
wants to manage the high-power threat to profitability of buyers. In the profit equation, (Profit = (Avg.
Price * Quantity Sold) – Internal Costs), the buyers are responsible for driving the average selling price
and the quantity sold in an industry, such as the Wireless Telecommunications Industry, that has a highpower threat of buyers. Service providers that can justify a higher average selling price while selling
higher quantities than their rivals will be the most profitable. For this reason, companies must be
successful in managing the satisfaction of their customer base in order to achieve higher sales figures
relative to their rivals. If customer satisfaction is measured by churn rate, then the company which best
manages the rate at which it increases or decreases its customer base will be able to sell the highest
quantity at the highest price. All else being equal, customers will select the company which they believe
offers the best value in the industry, and terminate their contracts with the companies which do not satisfy
them. Therefore, the key success factor of customer satisfaction is important in managing the high-power
threat to profitability of buyers.
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Part IV: Strength Assessment
Key Success Factors: Raw Data
Key Success Factor
Economies of Scale
(Costs/Total Assets)
Exclusive Product
Contracts
(Amount of Licensing)
Product Innovation
(Breadth of Product
Line)
Strategic Alliances
(Amount of Investments
in Partnerships)
Network Coverage
(Customer Base)
Customer Satisfaction
(Churn Rate)
AT&T
101526 =.38
268752
Raw Data
Verizon Wireless
45580 =.34
134352
[Source: 10K Income Statement &
Consolidated Balance Sheet]
$48 Million in Licensing
[Source: 10K Income Statement &
Consolidated Balance Sheet]
$72 Million in Licensing
[Source: 10K pg. 33]
52 Cellular Devices
[Source: 10K pg. 92]
60 Cellular Devices
[Source:AT&T Website]
$2,921 Million Investments
[Source: VZW Website]
$1,988 Million Investments
[Source: 10K pg. 50]
85.1 million customers
[Source: 10K pg. 105]
91.2 million customers
[Source: 10K pg.2]
1.48%
[Source: 10K pg.9]
1.44%
[Source: 10K pg. 6]
[Source: 10K pg. 26]
Key Success Factors: Distinctive Competency Scores
Key Success Factor
Economies of Scale
(Costs/Total Assets)
Exclusive Product
Contracts
(Amount of Licensing)
Product Innovation
(Breadth of Product
Line)
Strategic Alliances
(Amount of Investments
in Partnerships)
Network Coverage
(Customer Base)
Customer Satisfaction
(Churn Rate)
AVERAGE SCORE
AT&T
Distinctive Competency Score
Verizon Wireless
2
4
1
5
2
4
5
1
2
4
3
3
2.5
3.5
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Verizon Wireless: Most likely to Sustain a Competitive Advantage
After examining the strength assessment, it is evident that Verizon Wireless is most likely to
sustain a competitive advantage over its competitors. As a whole, Verizon performed better than AT&T
with regard to five out of the six Key Success Factors selected. Most importantly, Verizon has a greater
chance of sustaining a competitive advantage because of its superior customer satisfaction. As noted
previously, a company’s churn rate is highly important in managing the high-power threat of profitability
to buyers in the wireless industry and Verizon’s low rate indicates superior customer satisfaction to
AT&T. It should also be noted that Verizon offers a vaster product line to a greater customer base than
AT&T. Because of its superior performance in these measures, Verizon will continue to improve their
churn rate which in turn will help distance themselves from competitors. Thus, due to superior strength
regarding Key Success Factors in the wireless telecommunications industry, Verizon Wireless is most
likely to sustain a competitive advantage.
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References
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<http://sec.gov/cgi-bin/browseedgar?company=&match=&CIK=T&filenum=&State=&Country=&SIC=&owner=exclude&Find
=Find+Companies&action=getcompany>.
Furchtgott-Roth, Harold. The Spectrum Wars. Forbes, 30 June 2010. Web. 3 Dec. 2010.
<http://www.forbes.com/2010/06/30/fcc-wireless-smartphone-obama-spectrum-opinionscolumnists-furchtgott-roth.html>.
IBISWorld Wireless Telecommunications Carriers in the US (2010). Retrieved
from NCSU Libraries Research Data Service.
Standard & Poor's Telecommunications: Wireless (2010). Available: Standard & Poor's [Access Date].
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Travlos, Darcy. How Wireless Carriers Can Recapture the Market. Forbes, 22 Nov. 2010. Web. 3 Dec.
2010. <http://www.forbes.com/2010/11/22/wireless-smartphone-carriers-verizon-intelligentinvesting.html>.
Verizon Wireless. Verizon Wireless. Web. 3 Dec. 2010. <http://verizonwireless.com>
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Dec. 2010. <http://sec.gov/cgi-bin/browseedgar?company=&match=&CIK=VZW&filenum=&State=&Country=&SIC=&owner=exclude&
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