Verizon buys Alltel to pass AT&T

Reuters reports today that adding Alltel’s 13 million subscribers puts Verizon at 80 million, surpassing AT&T’s 71 million. The deal is valued at $28 billion.

Smart move for Verizon.

With US mobile subscribers approaching saturation, there are few options for growth. Verizon moves into rural markets they don’t already operate in. If their estimates are right, the deal is cash flow positive from the first year and saves $9 billion in operating and capital savings over the next three years.

What about cell phone users?

I love having choices in carriers, but the consolidation seems inevitable, and like it benefits me.

The expenses of building scalable networks and systems, of supporting them and of matching pricing is just too large for lots of smaller players to stay competitive.

The failure of the MVNOs shows us how subscribers see wireless as commodity wireless market, and how competitition in this market won’t tolerate any additional layer of overhead.

Ultimately, it should be a good thing for consumers when carriers grow. Economies of scale allow continued downward pressure on wireless prices at the same time as more R&D and infrastructure investment.

Big companies don’t always act in the consumer interest that way, especially when they become a (near) monopoly. However, both Verizon and AT&T are far from being a monopoly. Competing with each other is likely to continue to drive value for the consumer.

Who knows, maybe Sprint will even become competitive again…

before AT&T acquires them to take back #1.

Thunder Lifetime Exclusive: The New Walled Garden?

Rumor is that RIM’s new BlackBerry Thunder will be a lifetime exclusive to Verizon and Vodaphone. This ups the ante from iPhone’s five year exclusive with AT&T in the US, though Apple has inked non-exclusive or co-exclusive deals in many other countries recently.

I’d thought the “walled garden” approach to data access on mobile phones was slowly slipping away as more phones support browsing the open Internet, including downloading media that can be used as ringtones or wallpaper.

(Just two years ago a carrier asked us to shut down a program giving away a free promotional wallpapers. They considered it “revenue leakage” since we weren’t selling it and giving them a cut. Now they charge the brand to deliver promotion content free to the user.)

The iPhone arguably replaced one walled garden with three:

  1. Works only with AT&T
  2. Preventing installation of applications until a future release
  3. Requiring that ringtones be purchased from iTunes

Being AT&T-only did provide the benefits of tight voicemail integration, simplified pricing plans and painless activation. Apple may not have been able to get cooperation for that improved overall experience without the exclusive. Maybe that’s a feature rather than a bug.

M-Metrics reports only 2.8% of US mobile subscribers accessed a downloaded application in February 2008. Arguably, Apple is just as concerned with user experience as with any revenue possibilities here. While there are great mobile apps available for most handsets which should be reaching a broader audience, everything is difficult about the old way of finding, downloading and paying for applications.

Will RIM have the vision to apply pressure for similar innovations in its deals with Verizon and Vodaphone, or is the exclusive just another way to keep customers locked in? Please add your thoughts in the comments…

CREDO Wireless: your phone bill support progressive causes

Formerly Working Assets Wireless, CREDO is an MVNO of Sprint. I’ve been seeing their advertising on the sides of buses here in SF, but I know the folks at CREDO and that they’re good people doing good work. With a CREDO Wireless phone, you get the same quality of the Sprint network, but with better support (you speak to passionate folks at CREDO) and a portion of your bill goes to causes you support rather than to larger margins for a phone company. Whether or not you get one of their phones, you can join their text messaging program (they send a text when you can do something to make an important difference):
CREDO Mobile Action Network – TEXT JOIN to 30644