In response to Verizon’s recent advertisements highlighting the deficiencies in AT&T’s 3G data network, AT&T this week sued its competitor. The carrier’s suit claims both that the map displayed in Verizon’s ad is misleading and that the commercials are causing the carrier to lose “incalculable market share…” and “invaluable goodwill….” AT&T argues that the substantial white areas shown on Verizon’s map are misleading because many of those areas are covered by its 2G EDGE network. Supporting AT&T’s claim is its online Coverage Viewer, but its suit entirely misses the point of Verizon’s advertisements.
While 2G coverage does provide data service, the service is so slow that it essentially renders devices using it useless. Demonstrating this, on the rare occasion that my BlackBerry reverts to Verizon’s 2G network, all hope of using data services is lost. Further to this point, when Apple released the first-generation iPhone, which could only access the 2G EDGE network, chief among users’ complaints was that its internet access was as slow as dial-up. Hence, Verizon’s expansive 3G network is a major advantage AT&T cannot currently compete with, and that is the point Verizon is making with its “There’s A Map for That” advertisements. Would it then not make more sense for AT&T to spend the money expanding its 3G network rather than suing Verizon?
As an aside, if AT&T truly believes that Verizon’s claims are impacting its goodwill (the value of its brand), expect an impairment charge to negatively impact its financial results at some point in the near future.