The interesting thing about the Map Wars of 2009


One of my first jobs was a sales position at an early stage cellular phone company in Dallas . It was the mid-80’s and cell phones were brand new, mostly installed in cars.  Coverage was very spotty, but coverage maps promised eventual service.  The portable phones were housed in Haliburton briefcases and required a weight belt (and an external antenna) to operate.  The entire service was expensive and iffy. 

I worked for a Southwestern Bell Mobile System dealer, so we had little to no initial competition.  By 1986, Metrocell (Lyn Communications) opened up shop in our region and started to woo customers away from us with free off-peak calls, steeply discounted (or free) phones and various claims about quality of service. 

We countered with The Map.  We had the most coverage, and we knew that in the end coverage was the feature that counted the most to the most profitable users on the network. The more you need coverage, the more strategic the phone is to you — and the more coverage trumps all.  Eventually Metrocell came up with their version of The Map that attempted to take away this advantage — but due to FCC regulations and heavy oversight at the time, their map showed their weaknesses.  They eventually lost the battle and were swallowed up in a consolidation. 

The lesson to be learned is simple: Your most valuable customers need the last mile to work.  The Law of the Last Mile is an old telco adage that states that if the customer doesn’t hear dial tone, you are not in business.  This is very true.  Additionally, the more you use the phone, the more coverage trumps equipment, rates or promotions. 

Over the last few weeks, AT&T and Verizon have stepped up their public battles to win the coverage feature debate.  Today, over twenty years since the industry popped up, coverage is still king.  Verizon kicked it off with their “There’s a Map For That” TV ad.  Ouch. First, AT&T took the litigation approach.  When the courts didn’t salute, AT&T took to the airwaves with a variety of commercials that combatted Verizon’s Map.  They even offered ads of Luke Wilson reading off all the cities where AT&T’s service works (for the least sophisticated viewers). Other Wilson ads offered an analysis of how the two networks stack up. Verizon is responding biting (Truth Hurts) and funny ads to counter.  Who is winning? It’s hard to say for now, but there’s a lesson in it for all of us: 

1. The iPhone gives AT&T an edge UNLESS you become convinced that you could get a comparable phone (The Droid or the Palm Pre) at a network (Verizon/Sprint) that offers a better last mile.  AT&T gets this, as well as the fact that the iPhone will soon be network-agnostic.  So the Map really matters to them. What’s your Map issue?  Do you have an exclusive product, yet can’t deliver competitively at the results level? Are you seduced by the sizzle? 

2. The 20/80 rule is still true, even in mature industries like wireless.  Your top customers, usually one in five, drive the majority of your profits.  At their volume or plan, you capture the margin upside as your incremental delivery costs (billing, marketing, etc.) drop to zero. AT&T is protecting it’s “platinum customer base”, which is likely to be more-than-average swayed by The Map argument.  What are you doing to protect your platinum base? Do you know who your top customers are and what results they’d come to depend on?  Have you benchmarked the benefits you deliver and not just the features you offer? 

Always look to learn lessons from fierce market battles. They are usually led by wicked smart people thinking in very strategic ways.