There is a lot going on at AT&T these days.
Following its recent acquisition of DirecTV, AT&T has been working to integrate its mobile and video services. But the company is also looking ahead to 5G and the Internet of Things (IoT), all while striving to grow its subscriber base and revenue in the here and now.
To get a better handle on where things stand at one of the nation’s largest wireless carriers, Wireless Week sat down with AT&T Mobility and Consumer Operations CEO Glenn Lurie.
It’s not about prepaid or postpaid anymore, it’s about overall branded growth
AT&T appeared to stumble back in July when the carrier reported 180,000 postpaid handset losses in its second quarter earnings report. But the carrier also added 365,000 prepaid net additions during the quarter.
While many focused on the former figure, Lurie said it is the latter that is more telling.
“The majority of those [postpaid] losses are very low-end feature phone losses, we’re talking $35 [average revenue per user],” Lurie said. “But in the prepaid space we’re gaining $40+ ARPUs with very low churn and high customer satisfaction. I’ll trade that low $40 customer for a $35 customer with similar churn and high customer satisfaction all day long.”
According to Lurie, the shift toward prepaid doesn’t reflect any preference on AT&T’s part, but rather the opening of more choice for consumers in the market. Instead of being a last resort option for low-income or credit-strained individuals as it has been in the past, Lurie said prepaid now offers consumers choice and quality service and devices.
“The big change is prepaid became a choice,” Lurie said. “A lot of people are saying let’s talk about post[paid], but it’s about branded additions. You’ve got to start to focus on all branded because customers are making the decision about how they do business with us.”
Unlimited for all is a big question mark
While AT&T did revive unlimited wireless service for customers who also sign up for its DirecTV or U-verse products, Lurie said unlimited for all is still up in the air.
According to Lurie, AT&T’s rollout of unlimited service to more than 5 million customers through the aforementioned offer went smoothly. The company prepared in advance with forecasting and models, he said, and was ready for the bump in usage.
While Lurie said a network in “phenomenal” shape could certainly handle unlimited for all, it’s more a question of demand. The DirecTV offer, he said, was a way of testing the waters.
“We haven’t made a decision yet,” Lurie said. “The reality is we’re going to listen to our customers and make that decision down the line.”
5G is awesome, but it’ll be a while yet
True, AT&T is among those gearing up for 5G. The carrier has already announced 5G trials with Ericsson, Intel and Nokia, and has begun lab work on system and software architecture.
But like others before him, Lurie warned that the industry should be careful with all the hype.
“It is exciting when you think about 10 times faster speeds and lower latencies, and we’re also excited that 5G has promise to be more efficient with spectrum and about the IoT features that are being discussed, but we’ve got to be careful,” Lurie said. “We don’t want to have too much hype because we’re not going to see these for four or five years... as an industry we don’t want to overpromise and under deliver.”
Lurie acknowledged that there may be some deployments of 5G-labeled technology before the anticipated release of 3GPP’s 5G standards in 2018, but said fully fledged commercial 5G networks won’t be up and running until late 2019 or early 2020. Until then, he said, 4G LTE networks will continue to be the industry’s bread and butter.
“Pre-standard launches are really just testing, they’re us trying to understand (5G),” Lurie said. “Right now those tests are really more focused on fixed point-to-point, not mobile. There’s a lot of buzz and noise, but for now we’ve got to stay focused on the fact that our 4G LTE networks are performing very well. There’s virtually nothing you can’t do on a 4G LTE network, and that’s improving every day.”
AT&T has a lot of integration up its sleeve
It’s no secret that mobile video usage is exploding right now, and is expected to continue expanding over the next several years. But as the industry scrambles to pivot, Lurie said AT&T is already sitting pretty thanks to its recent acquisition of DirecTV.
“What drives the video business is content, and having that size and scope (that comes with DirecTV) allows us to do a lot with the content players,” Lurie said.
Lurie said AT&T has been working hard to integrate its DirecTV assets into its business and has seen tremendous results thus far in the form of those aforementioned 5 million takers of the unlimited offer.
But more than trying to bundle mobile and video, Lurie said AT&T is looking to meld the two.
“The ability to take that content on any device you want and any place you want is really critical to our customers,” Lurie said.
Earlier this year, AT&T announced it would begin offering three new DirecTV streaming services, including a mobile-only option and options targeted at millennials and single-TV homes. But Lurie said AT&T is also looking beyond just smartphones, laptops and TVs. It wants to deliver content to any device in a customer’s life, including their car, he said.
That’s part of the plan, Lurie said, for AT&T to become a one-stop shop for everything mobile in an increasingly connected world.
“When you walk into one of our stores, what you walk into is our ability to completely mobilize your life, everything from connecting your home to digital life, to connected cars, obviously the smartphone business and now you throw in the video content,” Lurie said. “That is absolutely the value proposition we bring to our customers.”
The IoT will allow small solutions to make a big difference
Speaking of a connected world, Lurie said AT&T has put the pedal to the metal when it comes to pursuing IoT opportunities.
According to Lurie, AT&T already has upwards of 29 million connected devices - including 9.4 million connected cars - on its network, and it’s developing solutions that will add even more to the web.
In addition to its designated Smart Cities team, Lurie said AT&T has also opened six Foundries in California, Texas, Georgia and Israel over the past five years to promote innovation related to connected homes and cars, connected healthcare, cybersecurity, software-defined networking, business and enterprise services and the IoT.
When it comes to IoT, Lurie said simple solutions can deliver a big impact.
By way of example, Lurie outlined one solution from AT&T’s IoT Foundry that offered a waste company a way to track both the location of their garbage cans and how full they are. While it might sound simple, Lurie said the solution allows the company to plan its routes more efficiently and save on gas costs.
Lurie also sketched the details of another smart cities solution that allows municipalities to monitor their aging water systems. The solution, he said, allows the city to determine whether and where leaks are occurring, as well as monitor the water quality.
Yet another solution Lurie described was a system of sensors mounted on city traffic lights that sense gunshots, alert the police and tell where the weapon was fired and what caliber it was.
Lurie said such solutions offer AT&T a way to both deliver on its financial obligations by charging a small fee for connectivity while also improving the quality of life for people across the country.
“These are very, very simple, but very important solutions,” Lurie said. “Our job at the company is to raise shareholder value, but at the same time we have the ability to focus on things that will make people’s lives better. There’s a ton of opportunity here for us to do a lot of good.”