2011 was an active year in telecom. Verizon Wireless (VZ) seemed to solidify their position as the strongest carrier in the field after the AT&T (T) and T-Mobile was blocked by the Federal government. The deal was intended to address the increased demand for spectrum, as the number of people with cell phones, particularly smartphones continues to rise.
“The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.”
The AT&T and T-Mobile merger was anticipated to be the largest corporate deal of the year, but the Federal interference helped Verizon to reclaim its position as top dog late in 2011. The $39 billion takeover came to a bitter end at year end and led to a power scramble in mid-December.
Sprint (S) also began to regain market enthusiasm following the announcement in mid-December after more than a year of suffering through losses. Still many anticipate that Sprint will remain behind the pack in 2012, as Verizon increasingly gains market share. More and more, especially in 2011, telecom companies have begun shifting from being phone companies to data streaming companies and those that are succeeding in the latter of the same that thrived in 2011.
Sprint has not been among the top players in terms of their data streaming capacities. The stock was under heightened pressure in 2011 as they continue to spend on building out a new 4G LTE infrastructure. The massive costs associated with this have weighed on the company severely, causing the company to increase their debt load. While they work on this, Verizon and AT&T seem to be pushing forward with their own offerings that will have already gained significant market share before Sprint is able to release the 4GLTE.
Verizon, for its part, began getting ahead in the data streaming mode after the company made a deal with Apple(AAPL) for the iPhone4 to sync with its network. Prior to this point the iPhone had only been available on AT&T but the shift to Verizon helped bring in massive sales for both companies. The deal had been in the works since 2008, but the handset only became available this year, making it a break through one for Verizon. By November, more than 32 percent of iPhone users were Verizon customers.
Verizon’s fast pace and broad availability have made it difficult for other companies to compete, though they there have been no shortage of attempts. By July of 2011, Telecom operator, Vodafone (VOD) began a three month trail permitting unlimited data to its customers for the purpose of promoting the use of its services over other more prominent options.
Apple was also at the center of another telecom dispute with Nokia (NOK) regarding their patents. Nokia announced that Apple would have to pay for the use of their technologies, marking the end of a long legal battle between the two companies. The amount of the payment was not disclosed but Nokia’s Chief Executive, Stephen Elop commented, “We are very pleased to have Apple join the growing number of Nokia licensees.”
Chances are, Apple was not quite as happy with the development.
Apple was also embroiled in another lawsuit for patents when the company sued Samsung in April for allegedly copying the iPhone and iPad.
The iPad was the device to beat this year in telecom with companies around the world looking to create something that could compete. During the holiday season, some believed it would be the Amazon (AMZN) Kindle Fire, but the iPad remains untouched in terms of the cream of the crop.
Companies across the telecom sector, including Samsung and Research in Motion (RIMM) attempted to enter the tablet market without much success.
RIMM had an especially hard 2011,with share prices plunging and enthusiasm for the Blackberry continuing to decline as the iPhone gained dominance for customers of both AT&T and Verizon.