Company / division: AT&T
AT&T Launches Own-Brand Tablet with DirecTV Front and Center (Aug 21, 2017)
AT&T today announced Primetime, an own-brand LTE-enabled tablet which it will sell under an installment model and allow customers to add on to their shared data plans. The device puts the DirecTV services AT&T also sells front and center, meaning that this is not just an opportunity to sell more connected tablets but also another push to connect its wireless and entertainment offerings in bundles. History here throws up some worries: Sprint and Verizon have seen terrible tablet subscriber growth in the past year because they’re passing the two-year anniversary of when they gave away lots of free tablets on two-year contracts, and customers are now churning in big numbers. This tablet from AT&T carries its own brand, and it’s not clear from AT&T’s press release what sort of specs the device has, but there’s a risk that AT&T sees the same churn in 20-24 months when customers have paid these things off. Overall, I’d also argue that AT&T’s bundling of wireless and entertainment hasn’t worked all that well either for its TV business or its wireless business, both of which continue to bleed subscribers, while Verizon bounced back in a big way in Q2 thanks to its big push around unlimited. That, and not TV/wireless bundles, seems to be what’s selling in the US wireless industry at the moment, and AT&T is the odd one out among the major carriers in not promoting the unlimited offerings it re-introduced earlier this year. I’m not sure this tablet changes any of that, and it feels like another attempt to shoehorn DirecTV into a wireless proposition rather than simply leading with what customers are looking for.
NBCU to Shut Down Seeso Comedy Subscription Service (Aug 9, 2017)
Huawei Smartphone Reportedly Coming to AT&T (Aug 4, 2017)
I’ve had a few items recently about Huawei, including an item earlier this week about global smartphone market share, and you’ll hopefully have sensed that I think it’s a fascinating company to watch. But one of the other consistent themes about Huawei is that it’s been successful in much of the world with one big exception: the US, where the major carriers haven’t sold its phones. Fellow Chinese smartphone maker ZTE has been more successful in getting its phones ranged by US wireless carriers, especially in the prepaid space, but Huawei has been absent. And it’s worth noting that when it comes to the postpaid market that dominates the US, there are really just three big brands: Apple, Samsung, and LG, in that order. Every other vendor has under 5% of the total US smartphone installed base, with Motorola and HTC rounding out the top five. With all that as context, the fact that The Information is reporting Huawei is working with AT&T for a launch, possibly built around its next flagship, is kind of a big deal. Given the flagship focus, this almost certainly means it’s coming to AT&T’s postpaid service, which is arguably an even bigger deal, and follows on from earlier reporting that AT&T was certifying Huawei’s chipset. Between this and the availability of the Motorola Z2 Force on all four major carriers, we’re potentially entering the first real phase of expansion in the US smartphone lineups offered by major carriers in quite some time, following a period of simplification and focus. That’s yet another sign of both maturing smartphone markets and a maturing wireless market in the US, which is going to force carriers to get creative in how they attract and retain customers.
via The Information
In a somewhat bizarre (and brazen) move, AT&T is “joining” the day of action due to take place tomorrow in protest at the FCC’s proposed changes to net neutrality rules, even though AT&T is entirely supportive of the FCC’s policy. AT&T’s argument for doing so is that, if the protest is about preserving an open internet, it’s all for that, but just sees what that means and the ways to achieve that goal differently. But it’s predictably spurred a backlash from the organizers of the events and others who see AT&T not as an ally but as the enemy in this cause. As I’ve argued from the beginning, and as an earlier piece from Tony Romm makes fairly clear, the odds of the protest succeeding in changing anything are very slim indeed, and the organizers seem to concede that – they’re talking more in terms of “not going down without a fight” than in terms of not going down at all. And that’s realistic because FCC Chair Ajit Pai has the votes he needs to push this through and he’s been a consistent opponent of the rules from the time they were voted in over his objections, in stark contrast to his predecessor Tom Wheeler, who seemed taken aback by the opposition to his first proposals on net neutrality. We’ll see what actually happens tomorrow when the protest takes place, but I suspect AT&T would have been better off quietly sitting this one out rather than pulling this stunt, which seems far likelier to get it lots of negative publicity than to do itself any good. There are certainly reasonable arguments to be made that the net neutrality rules go too far, or that it should be regulated differently, but a move like this does little to advance the argument.
AT&T More than Doubles DirecTV Now Live Local Channel Lineup (Jun 30, 2017)
DirecTV Now Struggling to Grow, Says Bloomberg (May 26, 2017)
AT&T-Straight Path Deal Becomes Verizon-Straight Path Deal (May 11, 2017)
★ AT&T Reports TV and Wireless Subscriber Losses in Q1 2017 (Apr 25, 2017)
AT&T reported Q1 2017 results today, and it looks to have been a grim quarter across its consumer business. It reported net adds of 2.1 million, but in reality saw a drop of 641k subscribers in the quarter due to the disconnection of 2.3 million subscribers as it decommissioned its 2G network and a removal of 400k reseller subs due to an unspecified “true-up” of its reporting. On the TV side, AT&T lost a total of 233k subscribers, a worsening of the past trend, which had been close to zero on a net basis between significant U-verse losses and good DirecTV gains. Those losses mostly came from those customers taking standalone DirecTV service without a bundle, and that’s worrying because although AT&T has been offering wireless-TV bundles since the merger closed, it can’t offer a national broadband-TV bundle, which is the one consumers mostly care about. That, in turn, is going to make it hard to turn that trend around, especially given that AT&T is already offering strong incentives for customers to bundle TV with wireless, including a $25 bill discount for TV and free HBO.
On the wireless side, connected devices (such as connected cars) continue to be the salvation for its overall subscriber numbers, because its postpaid business actually shrank in the quarter for the first time ever (as did Verizon’s), while its reseller numbers dropped like T-Mobile’s (possibly because big MVNO Tracfone disconnected 1.3m subs in the quarter). The re-introduction of unlimited plans was, however, a hit, with around 4.4 million new subscribers since the change, a more than 50% increase in that base. However, AT&T characterized its position now as being more or less the same competitively as at the beginning of the quarter, suggesting it doesn’t see any kind of permanent lift from the change. Financially, things overall were a little better – AT&T has been holding costs down in wireless which has allowed its margins to expand despite revenue challenges, and although equipment revenue is dropping rapidly due to much lower phone upgrade rates, that’s effectively zero-margin revenue anyway.
AT&T Starts Using 5G in Marketing for LTE Services (Apr 25, 2017)
AT&T announced today that it’s bringing what it calls 5G Evolution to over 20 metro areas by the end of the year, starting with Austin. However, as I’ve said before, 5G itself hasn’t been standardized yet, so the best anyone can claim to have today is pre-5G technology. But what’s more worrisome about this AT&T announcement is that it’s actually using that 5G Evolution brand as an umbrella term that includes some technology that has nothing to do with 5G, notably the faster LTE technology in the new Samsung Galaxy S8 and S8+. What we’re starting to see is the same marketing-led muddying of the water over a new wireless generation we saw with 4G a few years back, when Sprint, T-Mobile, and AT&T all used the term 4G to describe non-standard 4G network technologies (WiMAX and HSPA+ specifically). We’ve also already seen the gigabit LTE label thrown around, and though it’s technically accurate in terms of maximum throughput, it’s likely to disappoint consumers who actually use it. While carriers might want to steal a march on competitors, this does nothing for consumers, who will likely require significant education when real 5G does launch without being further confused by labeling non-5G technology with a 5G-related moniker. It also means that when 5G does launch, consumers will wonder what they’ve been using all this time, making it hard to develop strong marketing messages around real 5G. I’m hoping this doesn’t spread, but past experience suggests it will.
The FCC recently held an auction of spectrum to be freed up by broadcasters and made available for wireless services, in the 600MHz band, which is well suited to long-distance and in-building coverage. T-Mobile was the only wireless carrier among the big winners, with the two largest carriers having cleaned up in the previous auction, and a cash-constrained Sprint sitting this one out too (AT&T did win licenses worth $900 million, but T-Mobile spent $8 billion). The other big bidders were DISH, which spent nearly as much as T-Mobile ($6.2 billion), and Comcast, which recently announced its wireless service based on Verizon’s network but could eventually launch its own network. Though T-Mobile has always crowed about how much spectrum it has per customer, that was always more of a reflection of its smaller number of customers rather than a massive spectrum trove, and it lacked low-band spectrum. It has now made big strides in solving that problem, and plans to put at least some of that spectrum to work right away (though much of it will be unavailable for several years while the broadcasters go through the process of vacating it, with much of that unavailable spectrum covering the densest markets). It’s also worth noting that no phones in the US today support the 600MHz band – that support is likely to come early next year with a new Qualcomm modem, so even if T-Mobile does put a third or so of its new spectrum to work this year, it won’t do anyone any good until then. So, if you’re a US wireless customer today, none of this makes any difference for now, and it’ll only make much of a difference a year or several down the line if you’re a T-Mobile customer (or in limited cases an AT&T customer). Or as and when Comcast and DISH decide to put that spectrum to use.
Though 5G standards haven’t been finalized yet, it’s already clear that some major networks will be running in much higher frequency bands than previous generations of technology, and specifically in what’s known as the millimeter-wave bands between 30 and 300GHz, mostly in the lower part of that range. As such, spectrum in those bands has suddenly become much more valuable, and companies are starting to snap it up. AT&T already bought some earlier this year and now is spending $1.6 billion to buy up a holding company which owns a decent chunk of it. Straight Path hadn’t actually been putting it to use as required by its purchase contract, and so has been forced by the FCC to hand it over to someone else, precipitating a sale process. Given how little spectrum is available generally, this is a decent price for an increasingly valuable asset, and it will likely increase interest in other holders of higher-frequency spectrum, including DISH. We’re still very early in the 5G rollout phase, but we’re going to see lots more purchases like this (including some of actual businesses rather than mere holding companies) over the next couple of years as the big existing players and some new entrants line up 5G spectrum.