AT&T is a leader in telecommunication services, including cell phones, wireless, U-verse, digital TV, high speed internet, DSL, and home phone. AT&T currently employs over 280,000 people worldwide. AT&T is now ranked #7 on Fortune 500 list, where its main competitor, Verizon, is listed as #13. Headquartered in Dallas, Texas, AT&T Inc is the largest U. S. local and long distance phone service provider and second largest wireless service provider, with over 87. 0 million wireless customers. AT&T was created in 2005 after SBC Communications acquired AT&T Corp.
The current emergence of AT&T traces its roots back to 1882 and the Southwestern Bell Telephone Company. Ameritech, Southwestern Bell, Pacific Telesis, and Bellsouth comprised the bulk of the SBC’s consumer base before the AT&T merger. The 1982 breakup of the previously vertically integrated AT&T led to the divestiture of local service companies, resulting in seven regional holding companies, or “Baby Bells. ” The result of AT&T’s breakup was increased competition from the likes of Sprint and MCI. Two of the spun off regional holding companies, Bell Atlantic and Nynex, would later become Verizon, and US West would become Qwest.
AT&T operates across its main business segments: Wireless, Wireline, Advertising Solutions, and other. Its Wireless segment provides wireless voice communications services, including local wireless communications, long-distance, and roaming services with prepaid roaming agreements. This segment also supplies various accessories such as handsets, wirelessly enabled computers, and personal computer data cards. Its Wireline segment, which has previously been AT&T’s core business, has invested heavily in AT&T “U-Verse”, which offers high-speed internet, phone, and television services in one package.
Its Wireline segment also offers voice services, which include local and long-distance, conference calling, caller ID, call waiting, voice mail services and more. The company’s Advertising Solutions accrues directory, local search, and Internet-based advertising through the publication of its White and Yellow Pages directories. AT&T also provides multi-enterprise collaboration services to businesses in various industries that include retail, financial services, manufacturing, healthcare, and telecommunication. (Yahoo! Finance 2010) The company’s core strengths, weaknesses, industry threats and areas of opportunity:
Strengths: •Largest provider of broadband in U. S. •World’s largest communications holding company by revenue. •Broad portfolio of complementary products and services (wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services, telecommunications equipment, managed networking, wholesale services, and directory advertising and publishing). •Extremely capable network capacity, both physical (fiber optics) and wireless (including a growing 3G network. •AT&T Wireless exclusivity with Apple’s IPhone.
•Brand well known throughout multinational corporations AT&T is seeing growth come from both wireless, and broadband/IP services. AT&T is also the largest provider of WI-FI hotspots. AT&T bought Wayport, Inc, in late 2008, bolstering its position as the largest provider of Wi-Fi hotspots in the U. S. AT&T has put a lot of time and money into mobile devices. In 2007, the company entered into the Smartphone industry through a profitable partnership with Apple. By September 2009, 50 million IPhone have been sold and over 20 billion applications were downloaded, granting AT&T a substantial recurring revenue stream.
With the success of IPhone sales, AT&T jumped at the opportunity to enter data services business, which includes Web surfing and email use. With the company’s exclusive rights to the IPhone, AT&T added net 1. 9 million wireless subscribers in the first quarter of the year, taking its total to 87 million subscribers. AT&T is seeing promising results from U-verse, its integrated television, phone and internet service. The company has stimulated new revenue by adding millions of gadgets to its network that require a wireless connection, such as tablet computers, electronic-book readers and “smart” energy meters.
(The Economist 2010) AT&T’s 3G network has recently seen a huge turnaround. In February 2010, AT&T landed a win in a new test of 3G performance in the US. AT&T had both the fastest average download speeds, at 1. 4Mbps, and the fastest uploads, at 773Kbps. Both were major improvements and were as much as 84 percent faster than what was seen a year earlier. T-Mobile and Verizon were only periodically able to top 1Mbps while Sprint would only come close to the mark. (Sullivan 2010) Weaknesses: •Products and services could be improved.
•More sales staff •More marketing to get the information out •Large amount of debt •The cost required to maintain and improve wireless and wire line networks •Increasingly more price-competitive market in both retail and wholesale markets. •Company obligations and liabilities from old business unit spin-offs. At the end of 2008, AT&T owed 168. 9 billion dollars which included current liability, long term, and total deferred credit and other noncurrent liability. Their short term debt that was maturing within the next year totaled 14.
1 billion dollars and long term debt equaled 60. 9 billion dollars. Debt isn’t the only concern of AT&T. The company is taking a beating in Wall Street. The decline in landlines, which still accounts for around a quarter of its sales, is creating a lack of growth. Unless the company’s high-speed Internet business takes off or the iPad continues new wireless growth, the beating will continue. In 2009, the cell phone industry received the largest number of complaints. AT&T is a major contributor to this statistic. Common complaints question the reliability of AT&T’s network.
For a company that pitches “more bars in more places”, there are ongoing complaints about the speed and stability in major cities across the U. S. Other common complaints are drop calls, poor customer service (customers can’t get a hold of a real person), dead spots, etc. (Rupel 2010) To make matters worse, fierce competitors such as cable companies and firms pitching cheap, pre-paid mobile deals that compete with AT&T’s pricier, longer-term contracts are targeting its customers. AT&T changed to a lower 15 a month data plan (tiered plans); this is not an unlimited plan.
The average user is not very knowledgeable on how much data is used during file transfer. This will lead to unhappy customers, which in turn will lead to a customer service nightmare. The consumer usage for application store usage have really raised, the cost of these apps is very affordable to the consumer. The education needs to be given to the customers about the file size of the downloaded applications. This should be given to the customer in time increments how much they are using before the application is used this will benefit both user and company.
The customer won’t be surprised with a large bill and the company won’t be havening the complaints. This will lead to an increase of customer satisfaction. (Karthikeyan, 2010) Market Opportunities •Further industry consolidation (acquisitions). •Wireless growth, particularly through its partnership with Apple/iPhone. •Emerging markets/global expansion. •Further industry growth with 4G technology. AT&T has made major investments in developing high-speed internet and video services to compete with cable companies such as Time Warner Cable and Cablevision Systems.
At the core of this drive is Project Lightspeed, AT&T’s initiative to provide broadband to 19 million households. AT&T is focusing on being able to provide high-quality video services to its customers. AT&T was involved in a bundling agreement with Echostar Communications to provide broadband and telephone services along with Echostar’s satellite television. The laying of their own fiber optic wires puts the future of this relationship at risk. The Business sector is expanding which will have many future opportunities to expand wider, will mean success for the company.
The introduction of the new IPhone 4G will also help. The new technology is expanding and AT&T is keeping up with it. AT&T is the only company to have the IPhone at this point, and this will keep them to an advantage over the other wireless companies. Tiered plans are changing the way the consumer buys. AT&T must make plans competitive to their rivals in order to keep their customers. The lower costs will help for the users that don’t use data that much, instead of double the price the consumer will have choices now.
This is an opportunity to expand data users to consumers who are just wanted to try out data plans and didn’t want to commit to a $30. 00 a month plan. (Karthikeyan, 2010) Industry Threats •Increasingly ferocious competition in the wireless arena. •Emerging technologies — falling behind smaller, more nimble companies and operators. •Price competition within industry pressuring margins. •Weather damage to antennas and transmission lines. •Reliance on IPhone gives Apple an upper hand in brand visibility.
•Tier 1 AT&T Competitors: Verizon Wireless (VZ), Sprint Nextel (S), Qwest Communications (Q), Vodafone Group (VOD) •Tier 2 AT&T Competitors: Deutsche Telekom (DT), France Telecom (FTE), CenturyTel (CTL), Cincinnati Bell (CBB) •Competitors moving toward 4G network faster 4G technologies differ from 3G service in that it handles all services including voice, internet access, etc, in the same way, as packets of data. 4G also uses different, and better, wireless spectrum than 3G service does, and is capable of providing far better speeds to far more people at the same time.
That is why it is shocking AT&T doesn’t plan to move forward with 4G until 2011. Sprint has a wide lead over other major carriers in the move toward 4G. Verizon is also moving quickly to 4G, sticking to its promise of lighting up LTE networks in 25 to 30 U. S. cities by the end of 2010. (Sullivan, 2010) Why is AT&T falling behind in the race to the next generation of networks? AT&T’s top wireless people argue that “AT&T just finished a broad software upgrade of its cell sites to the faster HSPA 7. 2 technology, and does not seem to be in a big hurry to upgrade the network further in the near term.
” (Sullivan 2010) Whatever the case may be, it is a good idea to stay ahead of the upcoming demand. Strategic strategies: Cost leadership strategy would help AT&T. The cost leader’s goal is to gain a cost advantage in the industry (Parthasarthy, 2007, p. 232-235). A major cost for AT&T is from their product design, production, and marketing activities. So if there was a cost leader set in place for AT&T then it could help the company in their financial area of debt. The cost leader is expected to lower the overall costs of the company.
As well, differentiation strategy could help AT&T. The differentiation strategy focuses on the product’s features or the way it is offered as the primary means of gaining an advantage over rivals. (Parthasarthy 2007) Action Plan: According to the AT&T website, the company’s mission is to: “Connect people with their world, everywhere they live and work, and do it better than anyone else. ” The company plans to fulfill this vision by creating new solutions for consumers and businesses and by driving innovation in the communications and entertainment industry.
If AT&T isn’t going to move forward first with a 4G network, AT&T needs to focus on advances in the entertainment industry. For example, continued expansion in video offerings to include television services such as AT&T U-verse TV and AT&T DIRECTV. The company should rely heavily on their “three-screen” integration strategy to deliver services across the three screens people rely on most — the mobile device, the PC and the TV. (AT&T 2010) Conclusion: In summary AT&T has broadened their services past just wireless and long distance with the U-Verse TV and the Internet monthly service.
AT&T just introduced the new technology of the 4G iPhone. They now need to move forward with the 4G network to stay competitive and stay on top of the wireless world. As mentioned above, AT&T is ranked #7 on Forbes 500. If the company wants to stay ahead of their competitors, they need to be the leaders with 4G technology or have technology equally as good if not better. At this point, AT&T is the largest wireless service and local and long distance carrier. With continued marketing and progress to new technology they will remain on top. ? References AT&T. (2010) AT&T: Rethink Possible.
Retrieved November 12, 2010 from http://www. att. com/ Fortune 500. (2010). Retrieved November 12, 2010, from http://money. cnn. com/magazines/fortune/fortune500/2010/full_list/index. html Karthinkeyan, D. (2010, July 7). Analyst angle: bye-bye unlimited data plans-the drivers, threats and opportunites. Retrieved from http://www. rcrwireless. com/ARTICLE/20100707/opinion/100709981/analyst-angle-bye-bye-unlimited-data-plans-8211-the-drivers Parthasarthy, Raghavan. Fundamentals of strategic management. Boston, MA: Houghton Mifflin Company, 2007. Rupel, Matt.
(2010, February 18) Frustrated Clients Tell AT&T to Raise the Bars. Retrieved November 12, 2010 from http://www. thesantaclara. com/home/ Sullivan, M. (2010, March 24) U. S. Wireless Carriers Take Different Routes Toward Fast 4G Service. About. com. Retrieved November 10, 2010 from http://pcworld. about. com/od/networking1/U-S-Wireless-Carriers-Take-Different-Routes-Toward-Fast-4G-Service. htm The Economist. (2010, June 10). The Future of AT&T. Retrieved November 13, 2010 from http://www. economist. com/ Yahoo! Finance (2010). AT&T Profile. Retrieved November 12, 2010 from http://finance. yahoo. com/