Long-Distance Merger Deserves Caution
Shared via AddThis
I thought this was an interesting post by Forbes about Telecommunication Long Distance businesses. It discusses the possible merger between Sprint Nextel (NYSE: S) and Level 3 Communications (Nasdaq: LVLT) in a joint venture that could lead to a spin-off of their long-distance network businesses.
This is a lofty expectation considering Qwest (NYSE: Q) has struggled to find a buyer for its long distance fiber optic network. Qwest believes this segment is valued at $2B and was hoping bigger players, such as AT&T (NYSE: T) or Verizon (NYSE: VZ) would make a bid, but that did not happen.
However, there is a small chance of hope, as of late. Sprint's stock has been rallying and many financial guru's have buys on this stock. I, however, would never buy Nextel's stock because I do not agree with the quality of their product. How could I when AT&T, Verizon and T-Mobile have much better coverage? The only reason as an investor to buy Sprint would be in hopes for another buy out or merger. Anyways, that is my sole opinion.
Showing posts with label Verizon. Show all posts
Showing posts with label Verizon. Show all posts
Friday, June 19, 2009
Thursday, June 18, 2009
Washington to Question Wireless Companies
Lawmakers have recently been questioning major telecommunication companies such as AT&T (NYSE: T), Verizon (NYSE: VZ), T-Mobile (NYSE: DT), and Sprint (NYSE: S) about two separate issues: Text Messaging Costs and Exclusive Handset Deals.
Issue 1: Text Messaging Costs
CNET reported that since 2005, the cost of text messaging has increased 100 percent from 10 cents to 20 cents for all major Wireless Service Providers.
The reason to increase the rate to text message is unjustified. I would think over time as these Big 4 Wireless Service Providers acquire regional players, the price of text messaging would decrease. We are already seeing the price of unlimited Text Packages decrease, but why not the prices for those without a Text Package? I believe this is because they are trapping consumers into thinking they are getting more for less. By paying $20 for example, consumer do not feel like they have to worry about individual text messages adding up, but over time consumers will text less and the marginal benefit is passed onto these Big 4 Companies. Hence, that is why even though many of these Big 4 Companies stock prices are down from the Market highs in 2007, they are great to have in your Portfolio because they typically yield a comfy 6%+ dividend. They always find a way to make an extra dollar!!
Issue 2: Exclusive Handset Deals
Many Wireless Service Providers have experienced exclusive handset agreements as the Telecommunication industry has evolved. Two recent examples are the Apple iPhone being sold at AT&T, and the Palm Pre being sold at Sprint Nextel.
As consumers often complain about not being able to purchase the gadget of choice because of its offering only on specific networks, Congress has taken notice. John Kerry, Massachusetts Senator, sent a letter to FCC Chairman, Michael Copps on June 17th, 2008, which asked the FCC to examine whether handset exclusivity hampers consumer choice and market competition.
Consumers, especially those whom are tech savvy, oftentimes want the latest gadget. This usually causes them to break a contract, purchase a new phone and ink a new service agreement. Is this good for the marketplace? The cellphone companies generally prefer to sign exclusive agreements with manufacturers to insure the best position in the marketplace for the latest-&-greatest device. Hence, they like consumer competition, but do lose out when their company is not on the right side of the exclusive agreement. For example, AT&T was on the right side of the agreement to sell the Apple's iPhone in AT&T stores, but competitors like Verizon, Sprint, and T-Mobile were not.
The answer is still unknown if Exclusive Handset Deals are the best thing for both consumer choice and market competition. I would argue it only gives the company with the exclusivity rights the edge, and leaves both the competition and consumer out to dry. The competition faces higher churn rates and misses out on sound customer acquisition since Manufacturers are signing these agreements. The customer is the victim too. They are put in a dilemma of constantly switching Wireless Service Providers because the gadget of choice is not offered at their current Wireless Service Provider.
All in all, if one examines this topic from the Consumer and Firm standpoint, both are victims of fierce market competition.
Issue 1: Text Messaging Costs
CNET reported that since 2005, the cost of text messaging has increased 100 percent from 10 cents to 20 cents for all major Wireless Service Providers.
The reason to increase the rate to text message is unjustified. I would think over time as these Big 4 Wireless Service Providers acquire regional players, the price of text messaging would decrease. We are already seeing the price of unlimited Text Packages decrease, but why not the prices for those without a Text Package? I believe this is because they are trapping consumers into thinking they are getting more for less. By paying $20 for example, consumer do not feel like they have to worry about individual text messages adding up, but over time consumers will text less and the marginal benefit is passed onto these Big 4 Companies. Hence, that is why even though many of these Big 4 Companies stock prices are down from the Market highs in 2007, they are great to have in your Portfolio because they typically yield a comfy 6%+ dividend. They always find a way to make an extra dollar!!
Issue 2: Exclusive Handset Deals
Many Wireless Service Providers have experienced exclusive handset agreements as the Telecommunication industry has evolved. Two recent examples are the Apple iPhone being sold at AT&T, and the Palm Pre being sold at Sprint Nextel.
As consumers often complain about not being able to purchase the gadget of choice because of its offering only on specific networks, Congress has taken notice. John Kerry, Massachusetts Senator, sent a letter to FCC Chairman, Michael Copps on June 17th, 2008, which asked the FCC to examine whether handset exclusivity hampers consumer choice and market competition.
Consumers, especially those whom are tech savvy, oftentimes want the latest gadget. This usually causes them to break a contract, purchase a new phone and ink a new service agreement. Is this good for the marketplace? The cellphone companies generally prefer to sign exclusive agreements with manufacturers to insure the best position in the marketplace for the latest-&-greatest device. Hence, they like consumer competition, but do lose out when their company is not on the right side of the exclusive agreement. For example, AT&T was on the right side of the agreement to sell the Apple's iPhone in AT&T stores, but competitors like Verizon, Sprint, and T-Mobile were not.The answer is still unknown if Exclusive Handset Deals are the best thing for both consumer choice and market competition. I would argue it only gives the company with the exclusivity rights the edge, and leaves both the competition and consumer out to dry. The competition faces higher churn rates and misses out on sound customer acquisition since Manufacturers are signing these agreements. The customer is the victim too. They are put in a dilemma of constantly switching Wireless Service Providers because the gadget of choice is not offered at their current Wireless Service Provider.
All in all, if one examines this topic from the Consumer and Firm standpoint, both are victims of fierce market competition.
Tuesday, June 9, 2009
Palm Pre Specs
Per the Manufacturer, below are a list of Specs for the new Palm Pre which hit stores on May 19th.
It is currently exclusively only sold at Sprint for $199 after rebate, but is rumored to be coming to Verizon Wireless in January 2009. It must be a hot phone when Sprint sold out of them in the opening weekend, and if Apple is cutting the price of their current iPhone 3G to $99, which was announced yesterday. Nonetheless, the debate will live on through the end of 2009 if whether the new Palm phone is a lame duct attempt at being an "iPhone killer."
Email
It is currently exclusively only sold at Sprint for $199 after rebate, but is rumored to be coming to Verizon Wireless in January 2009. It must be a hot phone when Sprint sold out of them in the opening weekend, and if Apple is cutting the price of their current iPhone 3G to $99, which was announced yesterday. Nonetheless, the debate will live on through the end of 2009 if whether the new Palm phone is a lame duct attempt at being an "iPhone killer."
Operating system
- Palm® webOS™
Network specs|
- 3G EVDO Rev A
Display
- 3.1-inch touch screen
- 24-bit color
- 320×480 resolution
- HVGA display
Keyboard
- Physical QWERTY keyboard
- Microsoft Outlook® email with Microsoft® Direct Push Technology
- POP3/IMAP (Yahoo, Gmail, AOL, etc)
Messaging
- Integrated IM, SMS, and MMS
GPS
- Built-in GPS
Digital camera
- 3 megapixel camera
- LED flash
- extended depth of field
Sensors
- Ambient light
- accelerometer
- proximity
Media formats supported
- Audio Formats: MP3, AAC, AAC+, AMR, QCELP, WAV
- Video Formats: MPEG-4, H.263, H.264
- Image Formats: GIF, Animated GIF, JPEG, PNG, BMP
Wireless connectivity
- Wi-Fi 802.11b/g with WPA, WPA2, 801.1x authentication
- Bluetooth® 2.1 + EDR with A2DP stereo Bluetooth support
Memory
- 8GB of user storage (~7.4GB user available)
- USB mass storage support
Phone as laptop modem
- Bluetooth tethering
Connector
- MicroUSB connector with USB 2.0 Hi-Speed
Headphone jack
- 3.5mm stereo
Palm® Touchstone™
charging dock
- Compatible
Dimensions
- Width: 59.5mm (2.3 inches)
- Height: 100.5mm (3.9 inches)
- Thickness: 16.95mm (0.67 inches)
- Weight: 135 grams (4.76 ounces)
Subscribe to:
Posts (Atom)