Verizon Case Study

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Verizon Wireless is the nation’s second largest wireless provider. With 67 million subscribers, Verizon trails the largest wireless provider, AT&T, by only 4 million subscribers. The business is a joint venture of Verizon Communications and Vodafone PLC, officially named Cellco Partnership, and operates as Verizon Wireless. Verizon Communications is the majority shareholder with a 55% share. “I think the point of it for us is that we are who the customers look too to provide them the services they want. We are going to let them define what they want around advertising. Do they want location-based things sent to them? Do they want local promotion? If so, we'll do that. Having the customer in control of it as opposed to having the carrier ram things down their throat is an important distinction.” -Lowell McAdams, Verizon CEO

With an emphasis on the individual customer, Verizon Wireless recently passed on the Apple iPhone because they would not be able to service it themselves, but rather have to send it to Apple for work. With a strategy of quality and product differentiation within a landscape of vicious competition, Verizon felt it necessary to differentiate based on the service they offered their customers. Verizon is well positioned in the wireless market due to their strong market presence and consumer base. Further, their impending acquisition of Alltel can potentially position them to be the largest US wireless carrier, by adding 13 million additional subscribers. So where exactly should such a corporate giant look to go in order to further strengthen its brand? History

In 1982, the US government ended a 13 year long anti-trust suit against what was at the time the world’s largest corporation, AT&T, forcing it to divest itself into 7 regional Bell companies. Bell Atlantic was created as a result of these proceedings and serviced the northern Atlantic states. In 1996, Bell Atlantic announced that it would merge with NYNEX to become the country’s second largest telephone company. 1996 would be a pivotal year for Bell Atlantic, as the Telecommunications Act of 1996 was passed. Up until this point, communications, broadcast, electricity, and computing were all their own separate industries. The Telecommunications Act eliminated these boundaries and allowed any company to compete in any industry. The opportunity to increase their services led phone companies into a phase of large scale restructuring and acquisitions. Verizon Communications Inc. was formed in 2001 when Bell Atlantic acquired GTE, the largest independent telephone service provider in the US, in a $58 billion deal. Cellco Partnership, doing business as Verizon Wireless, was a result of a $90 billion joint venture between Verizon Communications and the Vodaphone Group, with 55% and 45% ownership respectively. Under the leadership of CEO Ivan Seidenberg, Verizon acquired MCI in January 2006 for $8.5 billion in a move to strengthen its position, which continued a trend of acquisitions and growth for the telecommunications industry. Introduction to the Key Competitors

The wireless industry is fiercely competitive in the United States market, which is dominated by several major players including AT&T, Verizon, SprintNextel, and T-mobile. AT&T
The leading wireless voice and data carrier in the US is AT&T Mobility with over $37 billion in sales and 70 million subscribers on its “ALLOVER” network. The company, which accounts for more than one-third of parent company AT&T’s business, provides a full range of wireless voice, messaging, and data services to consumer and business customers. AT&T Mobility's business services include high-speed wireless Internet access through its “Broadband Connect” service. AT&T Mobility provides extensive international network coverage for its subscribers in about 190 countries across the seven continents. Formerly known as Cingular Wireless, the company was a 60/40 joint venture between AT&T and BellSouth until the two...
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