The alarming rate of mobile theft has finally made the
government and wireless operators up their sleeves to address this
menace in a much stronger way. Mega carriers like
Verizon Communications
(
VZ
)
Sprint Nextel Corp.
(
S
),
AT&T Inc.
(
T
), and T-Mobile USA, a subsidiary of
Deutsche Telekom AG
(
DTEGY
), have come together with Federal Communications Commission to
develop a centralized data base to track lost cell phones and block
them, thereby making them dysfunctional for further use.
The service is expected to be launched within the next six
months and mobile phones will be provided with unique IDs that will
be recorded in the data base. Initially, the data base will
be shared by Verizon, Sprint, AT&T and T-Mobile and data
centralization is expected to take place within 18 months.
Thereafter, local carriers are expected to participate within
the next two years.
Given the popularity of smartphones (high-end wireless devices
in particular), gadget robbery has been on rise, accounting for
most of the robbery cases in the U.S. This eventually affects the
cell phone makers and distributors as the stolen devices find their
way into the grey market where they are sold at staggeringly low
prices.
This practice not only hurts the companies' finances but also
jeopardizes the image of their products as these high-end gadgets
are basically designed to cater to the up market consumers. Once
these high-end products enter the mass market, the market position
of these products gradually loses their sheen and eventually
affects their actual market price and the company's market
value.
As a result, many countries like Australia, UK, Germany and
France have adopted data-base centric mobile security plans which
helped them in lowering the theft numbers, if not completely uproot
the issue.
In the U.S., there are many such security software that claim to
protect mobiles upon theft but have largely failed to address the
issue. In such a scenario, tracking a mobile's the unique IDs
system through centralized data base remains encouraging but
thorough implementation of this is expected to take place gradually
over time. To support the success of the new phone tracking
system, the government is also considering new rules to make
tampering with unique IDs a federal crime so that every mobile
customer is covered by a cell phone ID.
We believe that the security initiative by the major wireless
carrier is promising for their existing users and may result in
more customer addition under their network. However, any meaningful
synergy arising out of such service apart from customer
satisfaction is something to watch out for.
We have our long-term Neutral recommendation on Sprint, AT&T
and Verizon supported by Zacks #3 Rank (Hold).
DEUTSCHE TELEKM (
DTEGY
): Free Stock Analysis Report
SPRINT NEXTEL (
S
): Free Stock Analysis Report
AT&T INC (
T
): Free Stock Analysis Report
VERIZON COMM (
VZ
): Free Stock Analysis Report
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