AT&T's exec blasts 'single play' strategy, says carrier is working to bundle wireless with entertainment
The new CEO of AT&T's entertainment business said that the carrier is working to combine the sale of content and video services alongside its wireless offerings, just like the carrier and its rivals have done in years past on the wired Internet side of the telecommunications market.
"Our belief is that getting the right kind of entertainment, the way that's frictionless to a customer over time, is just as critical in the mobile space as the attachment of fixed broadband and entertainment was in the old wireline space over the last decade," John Stankey, CEO of AT&T's Entertainment Group, which is responsible for the company's consumer efforts, said during an investor event today. Stankey was recently promoted to the position, which oversees both AT&T's wireless business headed by Glenn Lurie as well as its recently acquired DirecTV unit. "And that trend will become more and important. So we're focused on ensuring that that occurs moving forward. We want to build that category of folks who have a mobile relationship with AT&T, [and] can do what they really want to do, which is entertain themselves."
Indeed, AT&T has made clear moves in this strategy in recent months, first by offering an unlimited data option only to customers of its DirecTV service, and then just yesterday by announcing plans to offer a handful of new IP-based video options later this year under its DirecTV brand. Click here for that story.
"When you think about the direction things are going from a technology perspective, there is no question that more and more of our relationship with high-bandwidth service is going to become untethered," he added.
Further, Stankey appeared to take a shot at AT&T's smaller rivals like Sprint and T-Mobile that don't own widespread wireline networks or expanding video options. "Being a single play is not the place to be over time as these services converge and the infrastructure converges," Stankey said. "It's about bringing these services together, and that's not for the faint of heart."
Stankey pointed to AT&T's growing content offerings through DirecTV, its legacy U-verse service and its Otter Media effort with the Chernin Group, as well as the carrier's growing fiber footprint, as evidence of the carrier's position. "I believe we start from this in a very, very good place," he said. "We've got the opportunity to bundle."
Interestingly, Stankey also discussed AT&T's views on the rise of equipment installation plans (EIP) and the industry's move away from two-year contracts for handsets. He said the trend has resulted in wireless customers holding onto their phones for longer periods of time, though he declined to provide specific figures from AT&T on that development.
"It is shifting out and getting longer," Stankey said of the time that wireless customers are waiting to upgrade their smartphones. "It's not a trend that is unique to AT&T."
Stankey explained that hardware innovations in smartphones are slowing, and more services are becoming virtualized and moving into the cloud, which is reducing the push for users to upgrade to the latest and greatest smartphone. "I really don't see this dynamic being a whole lot different than what happened in the PC market, where ultimately over time you saw more virtualization of service occurring and there was less of a burning need to get into the upgrade cycle for the next new chip and the next new OS to gain access to it," he said. "I think we're just seeing history repeat itself."
Stankey acknowledged that AT&T now offers an EIP option that allows customers to pay off their phones over the course of 30 months, though he noted that most AT&T customers choose shorter payment periods.
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