At the moment, Verizon and AT&T are riding on top of the wireless phone business here in the US. Even if AT&T fails to acquire T-Mobile its clear that the two companies dominate the industry in terms of revenues. Oh, and both also have the iPhone for sale which is currently the hottest smartphone on the market. But one analyst is now saying that there are new threats that could topple Verizon and AT&T"s spot as the number one and two wireless carriers.
Bloomberg reports that according to Craig Moffett with Bernstein Research one of the threats has to do with texting. The story states, "Moffett estimates texting represents 16 percent of Verizon Wireless"s revenue, and contributes as much as 40 percent to total profit. The numbers are similar for AT&T Wireless, he says." But now there are apps for smartphones, such as Facebook, that can also handle text messages and basically bypass the need to sign up for a text message program offered by the wireless carriers. In fact Apple is suppose to release an update to iOS that will also offer similar capabilities to the iPhone. Moffet calls this development "a very real threat to Verizon and AT&T."
Another threat is the use of free phone calls via Internet smartphone apps and WiFi connections. That includes Skype, which Microsoft paid $8.5 billion for back in May, and Google Voice. Tim Derdenger, who is an assistant professor at Carnegie Mellon"s Tepper School of Business, is quoted in the article as saying, "Tech markets evolve very fast and they can quickly become significant competitors.”
While Verizon is making efforts to offer faster speeds for its customers with its LTE network (AT&T is well behind with its own LTE network launch still not available) Moffet believes that Verizon"s customers have increased their need for more data use via their smartphone. As a result Moffet believes that the cost to Verizon in making its LTE network may not be covered by the revenues generated by its customers.