AT&T and Verizon post losses in contracts and earnings

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Wireless carriers AT&T and Verizon have both posted sharp declines in earnings for the first quarter.  On April 21, CBS reported that AT&T posted a 43% decline in contracted subscribers from last year, adding 512,000 subscribers.  Today, the Wall Street Journal reported similar findings with Verizon, who experienced a 67% decline in new long-term contracted customers.

The decline for AT&T comes as a bit of surprise considering their monopoly on iPhone service and a grim outlook was predicted for other wireless carriers who are not able to offer the iPhone.  Analyst Craig Moffett at Sanford Bernstein, was quoted by CBS as saying, that for wireless carriers who do not offer the iPhone, it’s “hard to be optimistic about anyone else’s results without it”.  Moffett’s predictions were true when Verizon posted their earnings today.

It seems as though customers are shying away from the long-term contract and looking for other options – which there are.  Telecom companies are starting to the see the customers demand for inexpensive wireless service that does not force the customer to sign their life away for years at a time with expensive early termination fees.  Spot On Networks offers Cell-Fi™ for only $9.99 per month – allowing users to use their smartphones for both voice and data transfer over the Spot On Wi-Fi network (while not using any cellular minutes).  This service DOES NOT require any contract.  Spot On also offers their Wi-Fi Internet service, contract-free, starting at only $23.99.  Users are no longer willing to be taken advantage of in order to stay connected.  Consumers are more educated about their options and are less afraid to move away from the AT&Ts, Verizons, Comcasts, etc to receive better technology for less money.

Back to CBS reporting a decline in AT&T contracts: According to AT&T CFO, Rick Lindner, the decline indicates that most consumers own a smartphone now, not that AT&T is loosing customers to other carriers – I would be curious to see how many smartphone customers are beginning to exercise other options such as calling over Wi-Fi, Cell-Fi™, Skype, Fring, Google Voice, etc.


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