The push-to-talk cell-service market may not be a big one, but it is still valuable and competition is heating up between wireless carriers to corner the market.
In the past, Nextel had the market cornered, but Sprint acquired Nextel back in 2005, and has been slowly shutting down the old Nextel network. It plans to end the old push-to-talk service by the middle of next year, and this leaves a big opening for both AT&T (T) and Verizon (VZ).
So far, Sprint (S) has been able to retain about 60% of the former Nextel customers, but as push to talk comes to an end, it expects that rate will drop. Sprint is opting to use its airwaves for more profitable high-speed wireless networks.
With America’s wireless market as saturated as it currently is, it has become increasingly difficult for carriers to add new subscribers. Last quarter, the industry added just 700,000 new contract subscribers, a record low 1% growth rate.
During the third quarter, Nextel lost 866,000 contract subscribers, and this is not going unnoticed among the other big players in the industry.
AT&T sees a big opportunity with customers that are fleeing Sprint Nextel. It launched its own push-to-talk service earlier this month and hopes to not only attract Nextel customers, but also to convert current subscribers to the new service as well.
So far Verizon has been the carrier that has capturing the bulk of Nextel’s push-to-talk customers, but now that AT&T has jumped into the market, the battle is going to really heat up.
For sure neither company is dependant on push to talk, but catching these subscribers is a great way to boost overall subscriber numbers and of course to sell them additional, higher revenue, services down the road.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.