The Dow Jones Industrial Average (^DJI +1.79%) is up 51 points as of 1:50 p.m. EST, coasting comfortably above the 14,100 mark. A significant portion of the day's gains come from the telecom industry, where the two blue-chip Dow representatives just had their favorable status quo reinforced.
Verizon (VZ 0.49%) climbed 1.1%, and AT&T (T +0.47%) added 1% to its value. But it's not as if Ma Bell and Big Red went out of their way to make these jumps happen. Rather, the American telecom industry just sagged a little bit around the two giants' feet.
Prepaid-cellphone specialist Leap Wireless (NASDAQ: LEAP) recently added the Apple (AAPL +2.59%) iPhone to its product portfolio. The move was expected to boost Leap's fortunes, because many customers have left its Cricket service in search of a service provider that sells and supports the iPhone. But Apple didn't turn out to be quite the panacea that Leap had expected.
The company recently reported fourth-quarter results, losing another 200,000 subscribers despite the new iPhone offering. Today, analysts finished digesting the numbers and came away convinced that unsold iPhones and a large contractual commitment to Apple will add up to big trouble this summer.
The grand experiment of doing away with large up-front subsidies in exchange for lower monthly subscriber fees hasn't worked out so far. Consumers see not the long-term savings, but rather an immediate sticker shock -- and back to the traditional providers they go.
That's not only a small boon for AT&T and Verizon as they absorb some of the failed Cricket sales, but also a vote of consumer confidence in the subsidized model. Leap sank 3.5% on this analysis, which also boosted the Dow-bound telecoms.
