In a long-expected announcement, Verizon Communications (NYSE:VZ) will begin selling the iPhone 4 on February 10. Previously, the iPhone had only been available through AT&T (NYSE:T), so the addition of Verizon Wireless as a carrier will give buyers a welcomed choice.

IN PICTURES: 20 Tools For Building Up Your Portfolio

Verizon Versus AT&T
The "big two" in the domestic telecom field, Verizon and AT&T, continue to square off in the smartphone arena. AT&T activated 11.1 million iPhone users in the first nine months of 2010. Verizon Wireless, which is a joint venture of Verizon and Vodafone (Nasdaq:VOD), is the largest U.S. wireless carrier, but without the iPhone, has promoted other phones such as those with Google's (Nasdaq:GOOG) Android operating system. Complaints about AT&T network service have seen potential customers clamor to get the iPhone with Verizon as carrier.

3G, 4G Networks
The Verizon iPhone will debut with only 3G network connection, despite Verizon growing its existing 4G network. AT&T recently accelerated plans for the build out of its own 4G network when it announced the $2 billion purchase of broadband spectrum from Qualcomm (Nasdaq:QCOM). Although Verizon Wireless won't be able to immediately offer the iPhone on its own 4G network, it's expected to offer smartphones for its 4G network from makers such as Motorola Mobility Holdings (NYSE:MMI).

Immediate Impact
While the market took down both Verizon and AT&T stocks slightly on the iPhone announcement, the Street's reaction otherwise could best be described as muted, perhaps even blasé. The real import of this apparent non-story may not be in the immediate impact of the number of subscribers Verizon captures next year, but in the continuing technological developments this competition spawns, as well as competitive face-offs those create in the future. It would miss the point to focus too much on the near-term revenue impact to both AT&T and Verizon, though that's an important issue, but the jockeying to upgrade to 4G and get the iPhone certainly aren't game changing moves, these are moves that keep a kind of parity between the two companies.

Long-Term Impact
The entry of Verizon into the iPhone space places a chip on the table essentially to keep the game even. Whatever additional developments happen from here on out will likely raise the stakes again. The CDMA network, which Verizon will use with the iPhone, may soon be eclipsed by use of either AT&T's 4G or Verizon's recently rolled out Long-Term Evolution network (LTE). Still, though Motorola Mobility brought out a demo Droid Blanc for LTE on Verizon at the electronics industry's show, there aren't any immediate plans to bring LTE phones to market in the near future.

Verizon Versus AT&T, Still
It's one thing even to predict advancements in technology, quite another to predict their business impact. For the two main carriers, Verizon Wireless and AT&T, just as in AT&T's catch up move with 4G, we'll probably continue to see a lot of lockstep moves by these competitors. Competition has intensified over the years, compared to the relatively slow, sleepy days dominated by landlines.

The Bottom Line
For Verizon and AT&T, speed and innovation in seizing the newest tech, whether it's devices such as smartphones, network technology or something completely different, and turning it into part of their business that can monetized, is the order of the day. Yet, the new tech quickly becomes almost commoditized. Expect to see faster change and even fiercer competition. Right now, neither carrier has a clear advantage, as the Verizon iPhone move signals the two carriers' equivalence. It will be management, not technology, that ultimately determines whether Verizon or AT&T will ever be able to jump far enough ahead of the other to become dominant. (For related reading about Telecom Stocks, Dial Up Choice Telecom Stocks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  2. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  3. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  4. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  5. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  6. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  7. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  8. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  9. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  10. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!