When all else fails, buy your competitor?

When all else fails, buy your competitor?
Tags: Marketing
June 20, 2011

Is AT&T's proposed purchase of T-Mobile good strategy? Or another form of denial?

Recent T-Mobile ads have clobbered AT&T for its combination of high prices and slow speeds. AT&T's response? Buy T-Mobile. Is this a solution or an extension of the problem?

AT&T has historically been at the bottom of the heap in surveys of thousands of cell phone/data plan users. It's one of the reasons they're such an easy target for competitors' ads. The question is "Will the purchase of T-Mobile solve these problems?"

From the research that I've done I'm getting mixed signals on the technology front. Some reviewers claim that there may be improvements in the technology particularly in improved voice quality due to increased tower density and a broader network infrastructure. Others say that T-Mobile's voice quality is equally suspect. Will the combination of the two networks solve the problem? It might.

The pricing and customer service issues are another matter. The signal is quite clear. Here's what Parul P. Desai, policy counsel for Consumers Union, said: "AT&T is already a giant in the wireless marketplace, where customers routinely complain about hidden charges and other anti-consumer practices. From a consumer's perspective, it's difficult to come up with any justification or benefits from letting AT&T swallow up one of its few major competitors. We plan to work very closely with regulators and lawmakers to scrutinize this deal and what it would mean to people's pocketbooks." Ouch!

While AT&T and Verizon have similar pricing structures, customer surveys show that Verizon's dependability measured in terms of dropped calls/connections is far superior. As is its voice quality. Verizon's slightly slower download speeds are more than offset by its dependability. Unfortunately both companies received poor customer service ratings.

In my opinion, unless the T-Mobile purchase brings voice quality and dependability on a par with Verizon's and AT&T changes its "anti-consumer practices," this merger will simply be another example of a major corporation ignoring its customers wishes.

So what's my message to you? If you're not competing effectively, find the source of those problems and change your operations to leapfrog your competitors. Buying a competitor to remove an annoyance simply invites new competitors; competitors who will target you for all the same reasons as the one you bought. The real solution is to become more attuned to the markets desires and WOW them.