Sustainable Competitive Advantage

When looking at the wireless telecommunications industry its hard-to-find real

sustainable competitive advantages. Each major company in the industry might have an

advantage for a year but then it quickly goes away as the other companies copy it. A great

example of this is Verizon with its 5G network. Verizon were the first company in the whole

entire world to release 5G to the public and were the first company to start selling smart phones

with 5G capabilities. This 5G network started small as Verizon only released it in Minneapolis

and Chicago in April of 2019. However, this changed as Verizon added 5G to more and more

cities as the year went on. A lot of people might be wondering what’s the big deal with 5G? Isn’t

4G already super-fast? In fact, 5G is 20 to 30 times faster than 4G. Verizon’s new 5G network

gave them a huge competitive advantage. Many customers from AT&T and T-Mobile would

have to switch to Verizon to get 5G or would have to wait until those companies came up with

their own 5G network. Even though the other big companies in the industry have started to

slowly roll out their own 5G network, Verizon has been able to still be the kings of 5G.

Verizon’s 5G network is 14 times faster than T-Mobile’s 5G network and 11 times faster than

AT&T 5G network. The funny thing is that even though the competitors say they have 5G, they

are using a lower frequency than Verizon. This basically means that their 5G network will be

able to reach more people than Verizon’s will in the short term. However Verizon’s 4G network

is actually faster than its competitors 5G network. Verizon are going to continue holding this

advantage over there competitors unless AT&T and T-Mobile figure out a way to create a faster

5G network.

While Verizon will continue to nurture and expand their 5G network, this not the first

time they have had a fast and reliable network. For years Verizon has had the fastest network but
also their 4G network was the largest. Their 4G network covers about 70 percent of the United

States and this compares to AT&T with 68 percent and T-Mobile with 62 percent. While these

numbers are indeed close, it does not even show the network speed numbers between them.

Verizon has around 105.1 Mbps download speed compared to AT&T at 103.1 and T-Mobile at

74. Verizon continue to have competitive advantages in both coverage and speed and are

continuing their expansion of the fastest 5G network in the United States.

VRIO Analysis

A VRIO Analysis is essentially a tool used by companies to figure out which resources

are valuable and can give a company an advantage. VRIO stands for valuable, rare, inimitable,

and organized. We can use VRIO to look at Verizon’s wireless network. Verizon has the fastest

and largest 4G network and has by far the fastest 5G network. Verizon’s network is definitely a

very valuable commodity. Any company in the wireless telecommunications industry would love

to have their network. Their network is rare because of its speed. Verizon has the fastest speed as

can be seen in the paragraph above. Other companies are trying to imitate Verizon’s network but

none of them have been able to reach the speeds that Verizon has. Verizon has taken advantage

of their fast network by constantly expanding it so reaches the whole United States. There

network is very organized, and this shown through all aspects of their business from finance to

marketing. Since Verizon checks all four components of the VRIO analysis then there expansive

and fast network gives Verizon a sustainable competitive advantage.

Verizon’s Three Biggest Challenges/Issues

While Verizon’s fast and expansive network are a huge competitive advantage for them,

they are not a perfect company. Verizon have three big challenges/Issues which are: competition,

high cost of infrastructure, and security threats. The three challenges listed above are order from
most important to least important. Let’s first talk about competition. Verizon has two main

competitors who are AT&T and T-Mobile. While Verizon still has the speed advantage over the

other two companies, the biggest threat is the pricing war. The companies have always competed

on pricing and usually Verizon was more expensive. Obviously, consumers are willing to pay the

higher price for faster speeds, but in recent years Verizon’s competitors are getting closer and

closer in terms of speed. It is more about which company can give a customer more data while

paying less money. Of course, the companies are also competing on many other factors besides

price such as coverage, speed, 5G, etc. Verizon’s higher prices can explain by moving into their

next biggest challenge.

The high cost of infrastructure is a problem for any telecommunications company, but it

is an even bigger problem for Verizon because they pride themselves on their high speed and

huge coverage. This means they must spend more money to put more cell towers around the

United States to keep their network fast. A great example of the high cost of infrastructure is that

Verizon invested around 500 million dollars back in 2020. They did this to prepare for the

upcoming amount data usage due to the pandemic. They will also be using this investment to

continue to expand there 5G network. 5G requires Verizon to create brand new towers or at least

add 5G to the already established towers all around the United States. This huge cost of

infrastructure of leads back to their higher pricing compared to the other wireless

telecommunication companies. Another component of infrastructure is it breaking or getting

destroyed over time. Infrastructure does not last forever and needs repairs due to weather. Over

time weather can wear down on it and big storms can damage towers or even knock them down.

All these factors lead to Verizon spending billions of dollars every year to keep up their

infrastructure.
 The final challenge/issue Verizon faces are security risks. Security risks are like hackers

getting into the Verizon system and either stealing information or taking down the Verizon

network. These hackers could steal all of Verizon’s customers information. This could be credit

card info all the way to just general information about each customer. The hackers could also

takedown all of Verizon’s wireless network. This would be terrible. Just imagine waking up one

day and not being able to use the internet, send texts, or make calls. Luckily the chance of this

happening is quite rare but if it did happen then it would be absolutely devasting to Verizon and

their brand.

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