The following is a modified post from the Motley Fool editors' blog.

The wireless companies are bringing out their big guns this Holiday season. Unless you’ve been living in a cave or have filtered everything "non-Tiger" related out of your life, you’ve no doubt seen the salvos tossed between AT&T (NYSE:T) and Verizon (NYSE:VZ) Wireless.

A brief history of wireless time
Here's a brief rundown of how the cat-fight’s shaping up thus far:

It all started with Verizon's iDon't campaign. The ad promoted Verizon's new Droid smartphone from Motorola (NYSE:MOT) by comparing features the Droid had and Apple's (NASDAQ:AAPL) iPhone lacked. While most of the claims from the commercial were technically true, several were nit-picky differences that didn’t truly offer points of distinction between the Droid and iPhone.

After the iDon't campaign Verizon started running a series of commercials promoting their superior network. While the commercials were correct when comparing 3G networks, they ignored AT&T's wide ranging "2.75G"EDGE network. Essentially, while AT&T's EDGE network is slower than 3G networks, it's still largely serviceable (though not impressive) in providing data coverage.

AT&T felt as though Verizon was distorting their coverage area in the ads and filed suit. After a series of spitballs and hair pulling between the companies, AT&T dropped its suit and directly responded in its own series of ads.

The ads essentially amounted to Luke Wilson trying to charm the audience while promoting AT&T's superior features. These features being … basically a list of iPhone selling points that Verizon phones lacked. Of course, these claims were once again debatable. AT&T claimed only they could let you talk and surf the web. Funny thing is, I personally have Verizon's Droid and use it to talk and surf on a daily basis while connected to Wi-Fi networks. Again, a point that's technically correct, but not a huge point of differentiation.

A crowded marketplace
I know, more drama than an episode of Keeping Up With The Kardashians where Kim eats Chloe's last bagel (the nerve!).

But behind all this are some deep competitive dynamics that are shaking down the warm oligopoly that wireless providers have traditionally enjoyed. With a U.S. wireless penetration rate of over 90%, there are simply not a lot of new customers to bring in. 

Wireless companies are now being forced to fight among each other for the valuable postpaid customers who provide a constant stream of recurring revenue. Further, its these postpaid customers that typically sign up for additional services such as data and text messaging that allow wireless companies to increase their average revenue per user (ARPU).

So, it's only natural that Verizon would set its sights on its largest competitor, especially when it invested in building out a national network that is generally regarded as the best in the country. However, the fierceness of the squabbles is surprising and shows the added intensity wireless companies will use in courting customers during the coming years.

Don't forget the little guys!
Not to be left out of this discussion are Sprint (NYSE:S) and Deutsche Telekom (NYSE:DT) unit T-Mobile. Neither company has been able to gain much traction as of late, and both are looking for new means to attract customers. Among the four "Tier-1" carriers, T-Mobile has been mired in last place and struggled to roll out a competitive national data network. Meanwhile, Sprint has been slowly bleeding customers over the last couple years. 

As I mentioned earlier, the industry has generally maintained a comfortable business environment. Carriers locked customers into long contracts and generally avoided trying to compete directly on price. But desperate times call for desperate measures; with subscriber growth becoming increasingly difficult and fewer options on the table, T-Mobile recently unveiled a no strings attached plan that gave unlimited texting, talk, and data for only $80 a month.

Fool contributor Tim Beyers suggested T-Mobile's move was a powerful case for shorting telecoms. If the industry moves to a model where consumers are no longer locked into contracts, consumers will look for the handset most closely matching their specifications and then choose a carrier based on regional strength and price.

Bottom line
The bottom line in all this is that the next couple years are going to feature the wireless industry getting more aggressive, and that should be bad news for all companies involved, but probably good for consumers.

Worst of all, this could be a multi-front war for the wireless industry. Not only is the industry facing more intra-industry competition, but powerful software on smartphones threatens to disrupt its business model. Applications like Google (NASDAQ:GOOG) Voice threaten to circumvent added voice and texting charges. Consumers need only their data connection to make calls and send messages. While wireless companies should be able to maintain bundling packages, these kinds of applications could limit the amount of customers using margin-boosting plans that offer a higher number of voice minutes per month.

As far as the AT&T vs. Verizon spat, I think AT&T needs to re-tool a bit. Their advertising right now is predominantly focused on promoting features of the iPhone, but with the phone's exclusivity contract expiring next year, the company would be wise to not stake its brand around the iPhone. AT&T appears to have realized this point and backtracked a bit; it's now promoting the speed of their 3G network.

So grab some popcorn and sit back, the fireworks are just starting to fly. Have any thoughts on the wireless industry? Make sure to leave a comment below.