AT&T Sues Verizon Over 3G Network Comparison in TV Ad

Wireless Carriers at Odds About Campaign That Targets IPhone Users With Maps of Coverage Density

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SAN FRANCISCO (AdAge.com) -- The war between wireless carriers just got a little uglier.

AT&T Wireless is suing Verizon Wireless over its "There's a map for that" campaign, which illustrates the density of Verizon's 3G network on a U.S. map compared with that of its competitor's much sparser coverage. AT&T claims the spot is causing the No. 2 wireless carrier to lose "incalculable market share" and "invaluable goodwill."

The AT&T Wireless suit claims that the Verizon spots with coverage maps are causing it to lose 'incalculable market share.'
The AT&T Wireless suit claims that the Verizon spots with coverage maps are causing it to lose 'incalculable market share.'
Verizon's ad has gotten its enviable share of buzz, with many viewers appreciating the ad's humor, which parodies Apple's "There's an app for that" campaign. Apple's exclusive partner for its iPhone is AT&T. The ads show two maps side by side, with Verizon's coverage shown in red dots that blanket the country, while AT&T's service is shown as a cluster of blue dots and mostly white space.

AT&T is not disputing Verizon's claim about its 3G coverage, said AT&T spokesman Mark Siegel. Rather, it is claiming that Verizon, the No. 1 wireless company, is painting a misleading picture that suggests AT&T offers no wireless coverage in the white areas on the map, which indicate where it doesn't offer 3G service.

"We have taken this action because we believe Verizon Wireless' ad is misleading," Mr. Siegel said, adding that, in surveys the company conducted, "consumers took the white spots to mean we have no coverage at all, when our GSM network virtually blankets the country." The network Mr. Siegel refers to is its 2.5G network, which offers slower speed for data coverage than 3G.

In using the white spaces, Mr. Siegel said Verizon is using an industry convention that conveys "no coverage."

Seeking injunction
Last month, AT&T called on Verizon to change its portrayal of AT&T's network coverage; Verizon responded by removing the phrase "you're out of touch" in reference to zones where AT&T lacks 3G coverage, Mr. Siegel said. But AT&T's complaint says Verizon's tweak was inadequate, as the carrier "continued its plans to deceive consumers into believing that AT&T customers cannot communicate in areas where they have no 3G coverage," and it is seeking to keep Verizon from using the map in its advertisements until a court date is set.

Verizon spokeswoman Nancy Stark called the suit "without merit."

"Our ... maps are clearly labeled '3G coverage' and clearly state 'voice and data service available outside 3G coverage area.' [They] serve to inform customers where their 3G smartphone apps will work -- and where they won't," Ms. Stark said.

If AT&T claims that it's losing market share as a result of Verizon's ad, then the latter's single-minded pitch about its network quality (from "Can you hear me now" to "dead zones") over the years is bearing fruit, with the latest ad packing the most punch. By contrast, AT&T ads cover everything from "rollover minutes" to "more bars in more places" to its global coverage.

Interpublic's McCann Erickson is Verizon's agency of record. Omnicom's BBDO looks after the creative for AT&T's consumer business.

Slipping subscribers
Nonetheless, Verizon has felt pressure from the success of the iPhone, as over the past few quarters the carrier has lost customers presumably lured by iPhone's siren song. Verizon's churn, or the rate at which subscribers leave the carrier, has steadily climbed, reaching 1.13% last quarter, compared to 1.08% a year ago, among customers with a contract. AT&T has seen its churn rate drop, to 1.17% from 1.22% from the year-ago period. AT&T is also adding customers at a quicker clip: Last quarter it signed up close to 1.4 million contract subscribers, compared to just above 1 million at Verizon.

But AT&T's network has had its share of bad publicity this year, as heavy usage by iPhone and other smartphone users has overwhelmed its infrastructure, causing spotty service.

"This is damage control on something that's been rolling with people -- especially iPhone users -- knocking AT&T's network," said Bill Ho, an analyst at Current Analysis. "They need to stop the negativity."

But others aren't so sure, saying it draws attention to AT&T's network shortfalls -- and negates its image.

"This compounds the reactive, defensive image that surrounds the problem AT&T has had," said Andrei Jezierski, principal at i2 Partners.

"Wouldn't it be more constructive for AT&T to come back point-by-point?" Mr. Jezierski said. He suggests that AT&T run a commercial showing their own 3G map, with pictures of engineers expanding 3G coverage every day, while making clear that, while the fastest speeds and highest network quality are in certain colored parts of the revised map, other areas also have good service where consumers can still make calls and use data.

Mr. Jezierski also noted that it was a stretch to think that enough consumers would believe AT&T only works in the few areas called out by Verizon on its map.

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