VZW+Alltel: Content challenges ahead

The sparse, rural areas that AlltelCommunications L.L.C.’s network covers and the demographics it serves lead some to assume Alltel would have relatively little data uptake, but the numbers tell a different story. The No. 5 carrier is outperforming its four larger competitors in numerous content categories.
From March to April, Alltel customers’ use of news and information, video and e-mail jumped in the double digits in many categories tracked by comScore M:Metrics. Watched video grew 28.2% month-over-month, instant messaging increased 19.9% in that month and e-mail jumped 11.8%, according to the firm. “Alltel has seen a lot of growth in consumption on the content side,” said Seamus McAteer, senior analyst at the firm.
It’s difficult to draw sweeping conclusions based on the data, but few in the industry would argue against Alltel being labeled one of the most innovative operators when it comes to mobile content.
“For the last 18 months, they’ve definitely stood up as one of the innovative operators,” McAteer said.
“Alltel has been aggressive,” he said. “They have some things on deck that Verizon doesn’t.” Facebook enjoys play on Alltel, while you can’t find it on Verizon Wireless deck, he added.
Still, Verizon Wireless’ portfolio is stronger on many fronts, said Bill Ho, a senior analyst at Current Analysis. Its customers have access to live broadcast television via MediaFLO USA Inc. and a deep catalog on its Vcast services. “If you hold it side by side, Verizon’s better,” he said. “That just tells you that they’ve made a lot of content deals with a lot of people.”
Typically, the acquirer’s portfolio will take over whatever content the acquiree had available, Ho said, but he expects some of Alltel’s services to live on. “Whatever sells well on Verizon and Alltel will probably bubble up to the top,” he said.
“It’s got to be good news for Alltel subscribers; they should have at least some increased access to new capabilities,” said Nicholas Covey, an analyst with Nielsen Mobile.
Celltop, an application that essentially changes the user interface of phones and allows customers to customize the content they want more immediate access to, is one standout piece on Alltel’s side that some suggest will pave the way for future innovation. McAteer suggested Celltop might be a road map for more services like it down the road on Verizon Wireless.
The impact on the developer community is difficult to gauge. Some view Verizon Wireless’ proposed acquisition of Alltel as a negative for smaller, innovative developers clamoring to get their applications on board. Meanwhile, others think Verizon Wireless’ hints at a more open ecosystem coupled with Qualcomm Inc.’s recent initiatives around the BREW platform will play very well for the developer community. Both Verizon Wireless and Alltel use the BREW platform.
“I think Qualcomm’s laying the foundation” for an open BREW ecosystem, Ho said. “Verizon’s such a big player in the BREW ecosystem that it does not want BREW to go away because it’s so entrenched in it and vice versa.”