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AT&T lawsuit magnifies spotty service
Company claims Verizon's ads are misleading.
While AT&T (T) and Apple (AAPL) may compose some attractive ads showcasing the iPhone's slickest features, Verizon (VZ) can make the two companies stand and take notice by touting one superior aspect: coverage.
AT&T is suing Verizon over its recent campaign titled "There's a Map for That" -- a tongue-in-cheek take on the oft-repeated line "There's an app for that" in iPhone commercials.
AT&T is accusing the company of false advertising based on the ad's comparison of 3G coverage in either service. Whereas Verizon's coverage map is a sea of red, AT&T's barely freckles the country. The title underneath states that Verizon offers five times as much 3G coverage throughout the US.
Although it doesn't deny its 3G coverage is severely lacking -- Engadget cites its complaint which says it has "no quarrel with Verizon advertising its larger 3G network" -- AT&T claims the map comparison implies its service provides no coverage whatsoever in the blank, uncolored areas.
The company asserts that its capable -- though inferior -- EDGE network will allow calls to be made in the majority of those areas. As a result, AT&T is filing a motion to have the ads taken off the air.
AT&T had this to say in the lawsuit:
In essence, we believe the ads mislead consumers into believing that AT&T doesn't offer ANY wireless service in the vast majority of the country. In fact, AT&T's wireless network blankets the US, reaching approximately 296 million people. Additionally, our 3G service is available in over 9,600 cities and towns. Verizon's misleading advertising tactics appear to be a response to AT&T's strong leadership in smartphones. We have twice the number of smartphone customers... and we've beaten them two quarters in a row on net post-paid subscribers. We also had lower churn -- a sign that customers are quite happy with the service they receive.
Given how many people have complained (see Economic Snapshot: AT&T Still iPhone's Biggest Flaw, and also here, here, and here) about AT&T's spotty coverage, it probably has more to do with Apple's exclusivity contract with its iPhone.
Even before the lawsuit, Verizon had altered its ads to appease a cranky AT&T. The ads omitted the phrase "out of touch" and added "voice and data services available outside of 3G areas" as a small disclaimer on the bottom of the screen. But even that didn't keep AT&T from talking with its lawyers.
Overall, this appears to be a very needless lawsuit. Verizon covers all the legal bases in the ad and is well within its rights. AT&T's knee-jerk reaction to factual evidence just makes the company look like whiny and overly litigious spoilsports.
No positions in stocks mentioned
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It's pretty clear that the ad is talking about 3G coverage (it even says so on the map, if you look fast enough). AT&T just doesn't offer the service in as many areas as Verizon. I don't use either company so I really don't have a horse in the race, but if AT&T spent its considerable money on upping their coverage instead of filing junk lawsuits, they might fare better. At any rate, I don't see anything deceptive about the ads, unless you're not really paying attention. Just sayin'
1. Build up its coverage so Verizon can't make that claim
or
2. Pay Verizon to advertise for them
I have Verizon Wireless. I love it. The AT&T lawsuit is completely off base here. It is quite clear what the commercials mean on television. They are specifically talking about 3G coverage, aka data and internet capabilities. If the iPhone was available on Verizon, AT&T would already be out of business. Verizon's network, at least in the northeast where i live, surpasses any other network by far. I do travel up to the mountains in Maine every now and then and don't have service, but would would expect service when you are in the middle of the mountains? I actually like it because i go up there to get away from the world, it actually forces me to do this. And to all those Mac lovers who have iPhones and claim macs are the best and pc's suck. . . Think about it. How many times have people had to bring their phones, iPods or macs into see a Genius at the apple store? Everytime i walk in the line is full and its an hour wait. Screw apple and screw at&t for making an agreement. As soon as the exclusive contract is done with at&t they will fold and be bought by verizon!
You could not pay me to be an AT&T customer. I had Cingular and dumped it as soon as I could when AT&T took over. They deliberately target elders and sell them land phone packages far beyond their needs...they sold my Dad one that cost 3 times what he was paying with Verizon and had all kinds of things he would never use. He could not hear well enough to understand what they were selling to him and I am sure the rep could tell he was just saying "yes" because he did not know what else to say. I was furious and it took me multiple calls to their obnoxious reps and finally a company VP to get even marginal satisfaction. I was home and overheard portions of the cold call they made and could tell they were shystering. The rep heard me ask my Dad to talk to them and I heard her say "NO, I do not want to talk to her." I wonder why. Not long afterward, Dad died and I switched the phone service to Cox and have never had an issue. The customer service is much better and they respond to issues with sympathy, not cold and callous comments and "so whats?"
I do not care if AT&T was the only service there was - service is not what they provide, at least not in any human sense.
StockScouter data provided by Gradient Analytics, Inc.
Quotes supplied by Interactive Data.
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