AT&T, Verizon, Samsung, Apple in 2014: A Competition Review

It often seems obvious for executives from wireless carriers to comment at investor conferences on how they think the industry is fiercely competitive. Such a comment sounds even more obvious when it comes from executives at AT&T Mobility and Verizon Wireless. However, the year that went by has justified their statements thoroughly as every other cellphone network carrier felt the tremors of stiff competition in the marketplace.

In reality, the pricing competition started gaining momentum right from January of 2014 and only kept picking up pace during the rest of the year. In fact, it got a real boost when the merger dialogue between Sprint and T-Mobile US broke down. Although financial analysts have been chafing about the probable impact of the ongoing price competition on the long-term margins and investment of the network carriers, it is, somehow, a great development for customers.

In the smartphone arena too, the pricing competition is pacing up as Google, Microsoft, Mozilla and their device partners look out for fresh customers in the emerging markets. Parallel to this has been an unusual development that saw average selling prices going down with low-cost providers like Xiaomi coming up. Although Samsung Electronics and Apple are secure in their own niches as the No. 1 and No. 2 smartphone players, respectively, pressure has mounted as well and is greater than what they have been facing until now.

Further on, the overwhelming $44 billion auction for the AWS-3 spectrum has brought to the surface carriers’ desire for extra network capacity. The hefty amount being spent in the auction highlights even better the challenges that smaller carriers are facing. It is a bigger problem for those who have realized that they are falling short of the resources to continue and compete with the Tier 1 operators. As a result, such operators have entirely abandoned their wireless business.

Competition certainly heated up in 2014 on various accounts this year, and it only appears ready to heighten up ahead into 2015. The resulting disruption should then hopefully illicit greater innovation from carriers and device manufacturers.