Opposite Day

11:00 AM -- You've probably noticed the wireless price war that arose this week when Verizon Wireless announced its unlimited calling plan for $99 a month. Within only a few hours, AT&T Inc. (NYSE: T) and T-Mobile US Inc. both responded with the exact same offer. Fears of a price war sent telecom stocks plummeting. Both AT&T and Verizon are trading near their 52-week lows. Analysts such as UBS AG 's John Hodulik drastically cut their price targets for their stocks -- from $51 to $41 for Verizon and from $49 to $41 for AT&T.

We were expecting a price war of this nature, but wasn't it supposed to be wireline? One of the arguments that Verizon and AT&T have made while rolling out their respective TV services was that now customers would finally have choice and competition among video carriers. Competition in turn is supposed to bring more competitive pricing. But the opposite has happened. Both the telcos and the cable MSOs they now compete with have each jacked up their monthly rates for their respective TV offerings.

So instead, our price war is happening in wireless. Wireless for the past year has been a pillar of strength for both AT&T and Verizon. But as of now, it's killing their stock.

— Raymond McConville, Reporter, Light Reading

Be the first to post a comment regarding this story.
Sign In