With the market’s attention focused on the minute details of economic readings, the recovery of the fragile banking sector, and gold hitting all-time highs, some of the most stable companies have been left out of the headlines. However, that recently changed in regards to two Income Portfolio members over the last couple days, as both AT&T (T) and Verizon (VZ) made announcements that could shake-up the mobile phone industry.
In a policy reversal, AT&T announced that it would now allow internet phone service providers to use its 3G data network. This means that companies like Skype could use a smartphone’s data connection to provide phone service, essentially bypassing AT&T’s own mobile phone service. This marks a shift from only being able to use wifi (wireless) internet connections with these applications. While the move gives more freedom to subscribers to use their phone and data connections as they wish, it does raise a few questions.
The first question is how much the move will cannibalize AT&T’s own mobile phone plans, i.e. whether its customers will downgrade to the cheapest plan and simply use their unlimited data packages in conjunction with their internet phone service? The second, and possibly more important, question is what effect the move will have on AT&T’s data network.
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