AT&T To Focus on Services In Order To Drive Growth

Rather than focusing on offering a large selection of phones in its stores and on handset exclusives, like its deal with Apple to launch the iPhone in 2007, AT&T's new business strategy places more importance on services to lure in subscribers. In fact, according to BayStreet Research, AT&T had reduced its portfolio from 42 Android handsets offered in 2015 to approximately half that today. A recent example of the shift to services is AT&T's launch of its over-the-top service DIRECTV NOW. And by not counting data consumed while streaming DIRECTV NOW against a customer's data plan AT&T made the offer even more attractive to DIRECTV users on its network.

In contrast, Verizon, the nation's largest carrier, still offers handset exclusives. The Google Pixel is exclusively offered in Verizon's retail stores and the carrier still has its own Droid branded range of Motorola handsets. While the iPhone exclusive served AT&T well, the company also had to deal with less successful handset exclusivities on its network, like the Lumia 1020 and Android-based Amazon Fire Phone. “AT&T's new approach appears to assume consumers will buy either an iPhone or Samsung flagship, with reps instead focused on selling consumers a differentiated portfolio of services, not devices,” said Cliff Maldonado in a recently published BayStreet Research report.

As most handsets today are available across all four major US carriers, AT&T's focus on services may help it differentiate its offerings compared to the competition. Another reason why handsets may play a less important strategic role for AT&T is that the carrier had shifted its business from a subsidized handset model to a contract-free one, where customers pay full price for the phones. This means that phones offered by AT&T would cost about the same as those purchased unlocked from the manufacturer, and with no handset discounts, customers no longer have to rely on carriers to get the devices they want. AT&T's focus on content and services may in turn deliver more value to customers.

AT&T said that it offers a leading portfolio, in a statement to Fierce Wireless, "by listening to customers, gauging demand and delivering an outstanding experience through a variety of entertainment options, features, price points and new technologies." When AT&T began offering unlimited plans again, it also made a bigger push for services by bundling DIRECTV NOW for just $10 more per month with an unlimited package. AT&T is also stepping up its content business. The carrier is also in the midst of acquiring Time Warner in an $85 billion deal that would bring HBO, CNN and the Cartoon Network under its umbrella. If successful, AT&T will be able to offer more content to its subscribers, likely at a discount, and differentiate itself from other carriers. Like AT&T, Verizon also is also focusing on content and services with the recent acquisition of AOL and Yahoo properties.

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C H Nguyen

Documenter of life through my camera lens, frequent traveler and technology aficionado. Join me on my adventures on Instagram: @monsierpenseur.
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