1. Wireless Communication
Team 5
Sean Caruso
Josh Jones
Tim Marsh
Joseph Roy

2. Introduction Companies
Alltel
AT&T
Sprint-Nextel
Vodafone
Wireless communication carriers are increasingly relying on non-voice services to sustain growth
Premium services are of key strategic concern
Premium services in addition to phone service include data services, such as text, picture, video messaging and internet access

3. External Environment Analysis
With increased threats posed by new entrants, comes more intense competition
New entrants open the potential for firms to lose market share to the new firm, and have the potential to drive the prices of products and services down if they choose to engage in a price war.
Losing market share decreases overall profits, while price wars squeeze profit margins and force firms to further cut costs.
In the United States, the threat of new entrants is always present.

4. External Environment Analysis
Barriers to entry of wireless communications strategic groups are very high.
A firm must have a massive amount of capital and infrastructure to be able to have a wireless network across the country, and more increasingly, the world.
Government regulations exist, too, that are hard to comply with, and a new entrant would have to have significant resources to even enter the market.

5. Competitive Speed Fast Cycle Standard Cycle
Constantly releasing new products and services
Rapid imitation
Reverse engineering
Standard Cycle
Competitive advantage is less specialized
Moderately difficult to duplicate technology
Competitive prices after imitation

6. Threat of New Entrants
In the United States, the threat of new entrants is always present
Barriers to Entry are very high
Capital & infrastructure (wireless network across the country & world)
Government regulations
Intensity of rivalry is not increased

7. Product Substitutes
Typical substitutes: landlines, satellite phones, & internet chat
Voice-Over-Internet-Protocol (VoIP) phone service
Threat of new technologies
Intensity of rivalry is increased slightly

8. Bargaining Power of Suppliers
Phone suppliers have a lot of bargaining power if their product is differentiated and unique (iPhone)
Firms invent and produce their own technologies (services, network)
Components are generally commodities
Intensity of rivalry is not increased

9. Bargaining Power of Consumers
Do not have bargaining power to change the prices of individual carriers’ products or services, but can switch carriers
Number portability (2004)
Other than small contract cancellation charges, wireless carriers have nothing else to block customers from leaving
Intensity of rivalry is increased

10. Intensity of Rivalry of Competition
Several large carriers with a large amount of market share, unwilling to give up any of it
There are high fixed costs, high strategic stakes, and high exit barriers
Rivalry in the strategic group high
Intensity of rivalry increased

11. Opportunities Ability to create new technologies/markets
Ringtones
Camera phones
Wireless internet
Strategic alliances
Apple & AT&T
Roaming

12. Threats Technological advancements lead to new substitutes
Relationships with suppliers

13. Financial Data and Comparisons
12 month standard
AT&T is the clear leader with nearly 55% gain in stock price
Vodafone enjoyed 25% growth
Alltel declined nearly 5%
Sprint has lost 22.5%.

14. Financial Data and Comparisons
4 ½ month standard
AT&T has steadily added 12.5% (since the acquisition of BellSouth, T has enjoyed market dominance within the strategic group)
Sprint gained 6%, but with great variability.
Alltel had no change
Vodafone lost a few points.

15. Financial Data and Comparisons
30 day standard
S and T have both added just over 6%
AT again was unchanged
VOD just under 4%

16. Debt to Equity Ratio Debt to Equity (D/E) 0.15 0.65 1.15 1.65 2.15
2003
2004
2005
2006
Year
Ratio
D/E (S)
D/E (T)
D/E (VOD)
D/E (AT)

17. Interest-Coverage Ratio
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
2003
2004
2005
2006
Year
Value
Interest Coverage (S)
Interest Coverage (T)
Interest Coverage (AT)

18. Net Income
Net Income
500.00
2003
2004
2005
2006
Year
Gain/Loss
Net Income (S)
Net Income (T)
Net Income (VOD)
Net Income (AT)

19. Strategic Analysis Cost Leadership Differentiation
AT&T strives to keep costs at a constant, in order to keep prices competitive and attract customers
Vodafone seeks to reduce costs across the board through outsourcing internal functions
Differentiation
Sprint Nextel and AT&T both pursue a differentiated service strategy.
Alltel primarily serves the Midwest and Southeast segments of the United States.

20. Strategic Analysis First Mover Advantage High risk
Heavy advertising campaign
Reverse engineering often follows
Consumers are left with fairly similar products or services offered by every company in the industry
Cycle often repeats
It could be argued that avoiding the first move and offering a competing, unique version holds the real advantage

21. Strategic Analysis Vodafone
Takes a different approach to the first mover concept
Establishes itself in countries where the cellular phone has not yet become commodity.
They hope that, as the country progresses and wireless communication market penetration grows with societal development; an established name will secure a higher market share

22. Mergers & Acquisitions
Utilizing acquired companies to further expand their range of products and services available to customers
Large mergers, like the creation of AT&T Cingular and Sprint Nextel illustrate this idea
Vodafone proves to be an exception in some cases, however, given that they do not own a controlling stake in Verizon Wireless
Vodafone has tried to purchase the remaining shares outright, but also announced to the public that it would be content with its current stake since Verizon was making money

23. Conclusion
As competition in the wireless communications industry continues to grow, the strategies employed by companies within the industry become crucial factors that determine their success
Offering new products and services at competitive prices remains important, but it is also vital that the companies remain aware of the tastes and preferences of consumers, as well as the products offered by their competitors

24. Conclusion
Through successful differentiation, cost control and controlled growth, a company within the wireless communications industry can maintain the strategic advantage necessary to thrive in this fast paced, high tech market
A pattern exists amongst the companies which revolves around the development of new products and services, and follows with competitors adopting a similar offering soon after. This almost generates a kind of “First, Second and Third Mover Advantage,” and awareness of the cycle, as well as the means to efficiently roll out new products and services are traits needed by these companies to enjoy continued growth.