AT&T CEO John Stankey seemed decidedly unenthused about the opportunity prospects of private wireless this morning when he spoke at the J.P. Morgan Global Technology, Media and Communications conference.
He seemed concerned that helping an enterprise set up a private wireless network wouldn’t result in recurring revenue.
He didn’t address the fact that recurring revenue is not the only kind of revenue that a carrier can receive. The business divisions of the big carriers often work with large enterprise and government customers on a contract basis.
Stankey said AT&T will work with large customers on private wireless, helping them access spectrum and bringing its expertise with wireless networking.
“But that looks more like a services model than a recurring revenue model in my view of how that’s going to develop,” he said.
In fact, Verizon has already identified network-as-a-service (NaaS) as the primary way that its customers want to consume Verizon Business services.
Stankey said that working with enterprises to deploy private wireless creates a relationship that can lead to other business. But then, he went back to his interest in recurring revenue.
He hypothesized that an automobile manufacturer might want to build a private wireless network. “As part of that relationship, we end up having a capability to manage services in the vehicles they produce. Now, that starts to open up the recurring revenue opportunity that is the kind of thing that is in our sweet spot. But it’s predicated on the fact that we have a broader relationship with that enterprise.”
Inflation
A big part of Stankey’s conversation at J.P. Morgan today revolved around inflation and pricing.
Earlier this month AT&T said it was raising prices on some of its older wireless plans by up to $6 a month for single-line customers and up to $12 per month for families. But subscribers may avoid the price hike on their older plans by switching to new unlimited plans, which in some cases would save them money.
Of the pricing move Stankey said, “The first play we ran, we wanted to make sure we did something in a transparent way for our consumers. There are other paths you can take to manage pricing. In this case we went directly at certain plans and went at plans in parts of the customer base we felt weren’t enjoying some of the best offers we have in the market.”
He said there will certainly be some churn. But AT&T is counting on many of these customers contacting the company. “We felt this could be an opportunity for us to talk to those customers we have not spoken to in a long time and let them know we’ve got other plans in the market that provide a lot more capability than where they rested. While they may end up having to pay a little bit more, they could get a lot more value out of it.”
Some of the “more value” might be the ability to use their smartphones as a hotspot, receiving better security or perhaps receiving loyalty benefits.
“Our goal on everything we do moving forward is to find opportunities where we can equate a value dynamic back to the customer along with ultimately driving prices up,” said Stankey. “I actually believe we’ve got a lot of tools moving forward to think about how we work pricing; not just in that segment base we chose to deal with this time but more broadly across our customers.”