Competition heated up in the fourth quarter between Verizon Wireless and AT&T, the largest U.S. mobile-phone service providers, figures released Jan. 26 show.
Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group, said its average revenue per retail user declined 2.2 percent to $50.75 in the fourth quarter. AT&T, due to release earnings figures Jan. 28, may say its average revenue per user was at $51.07 in the fourth quarter, according to analysts at Credit Suisse. This year, AT&T’s ARPU may slip to $50.78, Credit Suisse says.
The falling per-user revenue figures reflect intensifying price competition among mobile-phone service providers, analysts say. Rivalry will increase if, as some analysts expect, Verizon Wireless begins carrying the iPhone, the smartphone created by Apple . “If every carrier is offering the iPhone, you [will have to] ask which one is offering the best price,” says Dunston Almeida, an analyst at Tracer Capital, a hedge fund manager.
Currently, AT&T is the only U.S. carrier of the iPhone. Apple won’t say whether it plans to widen the circle of iPhone partners, though Verizon Wireless says it has made upgrades to ensure its network would be ready in the event AT&T stops being the lone iPhone carrier.
Per-subscriber revenue is also under pressure as a result of gains in the number of so-called prepaid subscribers, who tend to pay less each month for mobile-phone service. Thanks in part to a new agreement to carry traffic from prepaid brand TracFone, Verizon Wireless added more prepaid subscribers than analysts expected last quarter.
Verizon’s Effective Ads
Other evidence of the carriers’ competition came in the final months of 2009, when Verizon Wireless flooded TV screens with commercials highlighting what it said are weaknesses in AT&T’s wireless network. Better-than-expected customer gains in the fourth quarter signal that Verizon Wireless may have gotten its message…