Friday, November 6, 2009

Is Verizon Being Unfair to AT&T in 3G Map Comparisons?

AT&T is suing Verizon over a snarky campaign that compares Verizon's 3G coverage to AT&T's: Is this unfair? It's maybe impolite, but it doesn't appear unfair or incorrect. Is it actionable? AT&T says the ads will make customers believe AT&T has no coverage whatsoever, not just no 3G data coverage, in the white areas in the AT&T map displayed. And the map is from a few months ago, while AT&T has built out a bit more blue in that time. (AT&T isn't complaining about the accuracy of the map's depiction of 3G.)

Fundamentally, though, we're seeing a battle between the last advantages of the Qualcomm EVDO standard compared to the GSM evolved HSPA family of standards. When Verizon installed 3G, the company did it in a big way, upgrading a large majority of its 2G 1xRTT nodes to EVDO Rev. 0, and later pushing those to Rev. A for the current footprint and speed. Sprint did likewise.

Verizon had to, because AT&T and T-Mobile had intermediate 2.5G and 3G steps that would have left Sprint and Verizon at a competitive disadvantage. AT&T and T-Mobile pushed out EDGE, which is several times faster than 1xRTT (which runs at fast dial-up modem speeds), and did so relatively inexpensively. AT&T Wireless and Cingular, at the time separate entities, had distinct plans to test and deploy UMTS, the 384 Kbps low-end 3G standard on the road to HSPA. (GSM 3G HSPA standards are broken down into downlink and uplink and there are flavors and steps there, but it's nice to just say HSPA to encompass the realm.)

For AT&T, EDGE was good enough outside metro areas, because it competed effectively with 1xRTT before Verizon and Sprint had a full EVDO footprint (even with Rev. 0). The company then essentially stalled because of first the Cingular/AT&T Wireless merger, and then the 60-40 ownership split between what was then SBC and BellSouth. The two companies didn't see eye-to-eye on spending on 3G. AT&T's 3G plans really only took off after the BellSouth merger, which also gave it 100-percent control of the cellular division. Any rational wireless firm would have spent billions during the good times to get a competitive 3G footprint with the CDMA competitors.

If Verizon and Sprint had limited 3G upgrades just to major metropolitan areas, they would have been way behind the ball--and AT&T would be running ads now laughing at the companies' sub-EDGE speeds in the country, and slower than HSPA rates in the city. (T-Mobile dropped out of this speed war for a few years while it acquired 3G spectrum and deployed its HSPA offering. The firm intends to have the fastest 3G network while 4G networks are being built with a test of 21 Mbps HSPA already underway.)

Verizon has to be aggressive right now, because it's switching to LTE for its 4G network, a GSM-evolved standard. It will be years before it has a national footprint for 4G using LTE (over 700 MHz spectrum). During that time AT&T will have bumped its 3G network nationally to 7.2 Mbps HSPA, and potentially even going to 14.4 Mbps HSPA (that requires more hardware upgrades, so hard to tell), and also pushing out LTE over 700 MHz.

In a couple years, AT&T will have the bragging rights on speeds, will start having a better 3G and 4G map to compare with Verizon, and Verizon will seem like the sucker. At least briefly.

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