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Buh-Bye AT&T
Lack of innovation in hyper competitive market dooms landline service provider
Lets compare two telephone companies: Sprint
Nextel and "the new AT&T" (a rebranding of Southwestern Bell not to be confused
with "the old AT&T"). Sprint Nextel embraces wireless broadband in the form of
WiMAX and publicly declares it will offer service to 100 million Americans by
2009. AT&T in response deploys WiMAX to a village in Alaska and puts out a press
release as some fig leaf to Wall Street that it, too, has a wireless broadband
solution.
AT&T will have to get a lot more tech savvy in the next few years in order to
survive. The "Big 3" landline telephone companies in the US (Verizon, AT&T and
Qwest) are being hit with severe "landline migration" issues in residential
phone service (ie people dump their landline in favor of their cell phone).
Cable companies offering VoIP have also sliced off large chunks of market share.
Qwest, for example, lost almost 800,000 of their 12 million landlines in 2005.
Residential markets for broadband are currently described as being a duopoly of
cable and landline. Now comes WiMAX which can be offered by a multi-billion
dollar company like Sprint Nextel or new market entrants given a relatively low
cost per sub for infrastructure. Just as residential customers gave up their
landline phones for the mobility of cellular services, they may do the same with
WiMAX.
And then it gets worse. The gravy for landline companies like AT&T is T1 (1.54
Mbps) services to the small to medium enterprise. Just as the business community
has its ears glued to cell phones, the business community will soon dump T1
services for mobile wireless broadband (they already do this thanks to Wi-Fi).
The service provider who can meet the demands of the mobile enterprise work
force will take market share from AT&T.
True, AT&T has a cell phone division, a fiber optic division, etc, etc, but if
it can't adjust to rapidly evolving market landscape, it may go the way of the
"old AT&T".
Memo to AT&T: rather than offer WiMAX to villagers in Alaska, why not do Los
Angeles or Atlanta? Now, that would wow Wall Street! Oh, did I mention Sprint
Nextel will have WiMAX covering Los Angeles and Atlanta by 2009?
Frank Ohrtman
WMX Systems
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