4G Service Falters as 3G Did Before It

Verizon Wireless’s 4G superfast wireless network has been down intermittently. That could drive off customers. And the network is at the heart of Verizon’s (NYSE: VZ) campaign to gain customers from AT&T Wireless and Sprint-Nextel (NYSE: S). Verizon’s poor preparation and weak infrastructure will cost it what should have been the high ground in the war for people who want next-generation wireless service.

The problem is not unlike the one AT&T Wireless had for months with the 3G service for the Apple (NASDAQ: AAPL) iPhone. AT&T (NYSE: T) was the only carrier to offer the iPhone then. The smartphone’s ability to transfer data and multimedia unexpectedly burdened AT&T’s 3G infrastructure and slowed service enough that customers began to rate the telecom firm’s service well below that of its rivals. It has taken AT&T at least two years to reverse that negative perception. In the meantime, it is hard to say how many consumers dropped the service or chose not to use it at all. But AT&T’s wireless business certainly suffered.

The Verizon problem, and AT&T’s before it, are examples of the lack of preparation wireless companies make as they rush to market with new products and services. None of the big U.S. wireless carriers can afford to fall behind its rivals. That makes each take some level of risk over whether their services will be adequate to customer needs.

Verizon is about to learn the lesson that AT&T did. Being first to market with a popular feature is a powerful tool. If that feature does not work well, being first can be ruinous.

Douglas A. McIntyre