VZW Challenges AT&T's Claim to Fastest & Most Reliable 4G-LTE Network in the U.S.

Cell TowerAT&T’s Bold Claim:

Ad in Sunday, July 21, 2013 NY Times (and other U.S. newspapers):

AT&T has the nation’s fastest and now most reliable 4G-LTE network.”

And that follows the telco giant’s July 18th press release with almost the same title:

AT&T’s Fastest 4G LTE Network Now Also Nation’s Most Reliable

That press release states:

“It’s time to take another look at your wireless network. AT&T not only has the nation’s fastest 4G LTE network, but now also has the most reliable 4G LTE network.  According to independent third-party data, AT&T has the highest success rate for delivering mobile content across nationwide 4G LTE networks.”

“More than 225 million people – in cities large and small – now have access to the nation’s fastest and most reliable 4G LTE network, and we want customers to know we’re setting the new standard for wireless performance,” said John Donovan, senior executive vice president for AT&T Technology and Network Operations.

Comment & Analysis:

AT&T’s new ads, which claim it has the “most reliable” 4G network, are based on “independent third-party data,” the company says.  AT&T claims it has the top success rate for delivering mobile content to its 4G network users, but hasn’t identified how that’s been proven or justified.  See what Verizon has to say about that in the next section of this article.

Why it matters: The dual claim to being both the fastest and most reliable is of prime concern to heavy mobile users, particularly those that watch streaming video or engage in video chats or other real time video conferencing on their mobile devices.  It’s also of concern to mobile cloud computing users, that access cloud resident apps on their smart phones or tablets.


Verizon Wireless Responds:

Verizon Wireless (VZW)– the joint venture between Verizon and Vodafone- has built its brand and reputation based on the superb reliability of its wireless broadband network. VZW’s advertising for years touted the “most reliable” 3G wireless network. In 2009, AT&T and VZW battled in court over advertising claims. The marketing battle has now shifted to 4G-LTE networks.

A VZW  Executive has just challenged AT&T’s bold claim:  “They have misled the public in the past,” said Mike Haberman, head of network solutions for Verizon Wireless, when asked about his initial reaction to AT&T’s ad. “I thought, ‘Here we go again.'”

Haberman said AT&T’s claim was backed by data that the company hasn’t disclosed. As a result, there’s no way to see how the tests were conducted and whether it reflected the true customer experience.  “If that’s how they want to make their claim, that’s fine,” he said in an interview with CNET on July 23rd.

Haberman touted a study by Root Metrics that found Verizon’s data and overall service to be superior in a majority of its markets in the United States. Haberman said he preferred Root Metrics because the firm attempts to replicate the customer experience. AT&T also cites Root Metrics as one of the studies that names it the nation’s fastest carrier.

“We have the most reliable network, and the public data supports us,” Haberman said.  He also noted AT&T hypocrisy flip-flop on its stance over HSPA+ as a 4G network. When T-Mobile began calling its HSPA+ network a 4G service, AT&T criticized the move. Three months later, it too adopted the same terminology.

Opinion: HSPA+ as 4G is a total stretch!  Many telcos, such as Verizon, have been steadfast against that designation.  For years, the ITU-R categorized both HSPA+ and LTE as 3G+ technologies, with LTE Advanced (not yet deployed) the only true “4G.”  So how can AT&T now come off and say that their HSPA+, with lower speeds than LTE, is a “4G” network? Especially after it criticized T-Mobile for doing the same thing!


Independent Analyst Opinion:

“It’s getting harder and harder to say what the ‘best network’ really means,” Craig Moffett, an analyst at Moffett Nathanson Research, told IBD.  

“For coverage, Verizon wins hands down. For speed, T-Mobile may actually have the best network. For capacity, Clearwire spectrum will give Sprint’s network the advantage.  And AT&T will be positioned as being pretty good on all dimensions, even if they’re best-in-class at none.”


Network Coverage, 4G-LTE Data Traffic and CAPEX:

VZW’s 4G network reaches 500 markets in the U.S. that is says can be accessed by some 300 million people. AT&T says its 4G network has been deployed in 328 markets covering more than 225 million people.

VZW has 94.3 million postpaid subscribers. These are the higher-spending customers who sign service contracts, as opposed to prepaid users who buy minutes as they go along. Verizon leads in U.S. postpaid users.  About 31 million of those subscribers used Verizon’s 4G LTE network via smartphones, tablets and laptop computers as of June 30. That’s up from 12% of its postpaid subscribers a year ago.

On Verizon’s quarterly earnings call, CFO Fran Shammo said that 59% of VZW’s total data traffic is running over its 4G network, though just a third of its customers have 4G enabled smart phones.  Shammo said Verizon users are buying wireless data plans with lots more  megabytes as they connect more LTE enabled devices to the company’s 4G-LTE network.

“Based on our trajectory of data usage, especially with where we see video going, we (expect) that the uptake in shared (data) plans will continue,” he said.  Verizon is hiking capital spending so it can meet demand, the CFO said.  “The incremental investment will more than pay for itself on top-line (revenue) growth from what I see,” he said. “And we are going to maintain our lead as the most reliable, consistent 4G LTE network. That’s what is driving the increase in capex.”


AT&T Reports “Solid Revenue Growth on Strong Wireless Gains Driven by Quality Network Performance:”

Nation’s Fastest and Most Reliable 4G LTE Network Driving Subscriber and Usage Growth:

  • 551,000 wireless postpaid net adds, best second-quarter postpaid net adds in four years
  • 35 percent of postpaid smartphone base LTE capable
  • Smartphone data usage per device up 50 percent year over year
  • LTE network expected to cover nearly 270 million POPs in 400 markets by year-end
  • LTE network build expected to be substantially complete by summer 2014

Strong Wireless Revenue Growth, Record Second-Quarter Smartphone Sales:

  • Wireless revenues up 5.7 percent, service revenues up 4.1 percent versus the year-ago quarter
  • Wireless data revenues up 19.8 percent versus the year-earlier period
  • Wireless operating income margin of 27.1 percent; wireless EBITDA service margin of 42.4 percent reflecting record second-quarter smartphone sales of 6.8 million, including record Android sales
  • Added 1.2 million new smartphone subscribers; smartphones 88 percent of postpaid phone sales
  • Total postpaid ARPU up 1.8 percent; phone-only ARPU up 3.0 percent

Comment & Analysis:

AT&T’s strong wireless growth comes at a cost, because the company has to pay hefty mobile device subsidies (especially to Apple for iPhones and iPADs)  for each new wireless customer it adds to its network.  Those subsidies reduce net profits and profit margins. AT&T expects 2013 wireless profit margins to be better than in 2012, due to “a longer phone upgrade limit for customers who sign a two-year contract as well as a new device upgrade plan where consumers pay full cost for their phone.”

AT&T also faced additional competitive pressure in the quarter as smaller rival T-Mobile US started selling Apple’s iPhone, a top seller for AT&T.

Note: We’ll report comments from other analysts related to AT&T’s wireless service revenues and profits in the Comment box below this article.

0 thoughts on “VZW Challenges AT&T's Claim to Fastest & Most Reliable 4G-LTE Network in the U.S.

  1. Thanks Alan for writing about this battle of the wireless titans. As a consumer, I did notice the Verizon ad, but I am a bit jaded by claims of “better”.

    It may not really have to do with the credibility of Verizon or AT&T, but by technology in general. So many times technology promises a simpler, better or more reliable experience and it doesn’t meet the high expectations of being the next big thing (or even just a simple improvement).

    As alluded to by Craig Moffett, “better” is a matter of how it is defined. Again, as a consumer, it can mean a lot of hours researching a particular thing, only to be disappointed.

    Call me jaded.

    1. Ken, You’re not jaded, just pragmatic!
      After my article was published, Bloomberg wrote: “AT&T posted profit that fell just below analysts’ estimates as costs rose for smartphone discounts used to persuade more customers to sign long-term contracts.” That’s exactly what I wrote in closing comment & analysis! More:
      “AT&T added 551,000 contract customers, compared with 320,000 a year ago. Analysts had projected 499,000 new monthly subscribers, according to an average of 10 estimates compiled by Bloomberg. AT&T Chief Executive Officer Randall Stephenson has been unveiling new subscription plans for heavy Internet users to catch up with Verizon Wireless, the largest U.S. mobile-phone carrier, which added 941,000 contract users last quarter.

      “For at least the near-term, AT&T does have a number of tools at its disposal that could help to at least partially offset the impact of competitive pressures emerging in the market,” Amir Rozwadowski, an analyst with Barclays Plc, wrote in a note yesterday.
      http://www.bloomberg.com/news/2013-07-23/at-t-profit-falls-shy-of-estimates-as-discounts-shrink-margins.html

  2. Alan, I look forward to your next article.
    I have now had VZW service for 17 months. Prior to that I had AT&T cell service for at least 17 years. My overall experience is far more positive with VZW relative to AT&T. I also find VZ policies and customer service clearly more transparent and superior.

  3. I had VW wireless service for 10 years. It started fine but the last two years were unacceptably bad. Their support and customer service were completely non-helpful and even outright rude on several occasions. Their over the air updates to our two HTC phones ruined them and shut off all data services which we were paying for. The VZW response: “Your phones are no longer in warranty and we will not be responsible for the result of this update. You will need to buy two new phones at full price.”
    I switched to ATT and have excellent service. When one phone began showing a problem, they replaced it within two days.

    Also when I was a VZW customer I bought a wireless LTE router at their local San Jose store. It did not work for more than 2 hours before dying. I took it back and exchanged it. The second one never connected to LTE at all. I took it back and asked fo my money back. The store told me that they would issue a refund. But when my bill came, there was no refund and I was charged for the device and the service. I called VZW and told them there was a mistake. They replied that “there are no returns and you are going to pay for this even though it was returned. You are also going to pay for the full month of LTE service even though you claim it never worked.”

  4. The analysis above about the “truth” of 4G definition are technically correct but completely irrelevant.

    To understand this claim by AT&T about 4G, just observe how politicians campaign and explain themselves while in office: they simply lie. The bigger the lie, the better. This is quite outrageous in the engineering community, but pols and wireless industry executives know one large fact about the voters and the wireless customers: they are profoundly ignorant of the facts of almost every issue. All that matters to these market and political operators is getting the lie out there and gaining whatever benefit they can until they are “discovered”. Then they stall, and continue to get the benefits. The public has about 32 bits of concept capacity in a terabit industry and political world.

    This is not a controversy about facts. It is a PR war and VZ will need to attack AT&T very fast and hard to penetrate the ignorance of the consumer.

    1. Lloyd, What happens when a politician does a flip-flop? Doesn’t he get nailed by the press for doing so? In the wireless world, AT&T did that by 1st criticizing T-Mobile calling HSPA+ =4G, but later calling its own HSPA+ =4G. You can’t have it both ways in either politics or wireless worlds!

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