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AT&T to offer new consumer service packages
Reuters, 05.09.03, 5:05 PM ET
PHILADELPHIA, May 9 (Reuters) - Ma Bell wants to become Ma Everything.
AT&T Corp. (nyse: T - news - people) plans to offer more consumer services, ranging from online content to wireless and high-speed Internet access, to prevent its residential business from becoming as extinct as the rotary dial telephone.
The No. 1 U.S. long-distance telephone company plans to reverse a more than 4-year decline in residential long- distance sales and a formal announcement on the new service packages, or "bundles," could come as early as next week.
"We really need a larger bundle to sell -- that is local, long distance, data, digital content, wireless -- all this becomes interesting to our customers," said John Polumbo, president of AT&T Consumer, during the company's first-quarter earnings conference call. "I plan to take the bundle a lot further than what the (Baby Bells) are doing today."
AT&T wants to use its blue chip brand name and 40-million- strong residential customer base in deals to resell services from other companies. Or it may offer incentives for customers to buy multiple services from it and its partners.
"AT&T still has one of the strongest brand names in the world and a large customer base, which they can leverage by selling bundles and cross selling other related products and services too," said telecommunications analyst Jeffrey Kagan.
AT&T is talking about reselling wireless services, forging pacts with content providers such as Walt Disney Co. (nyse: DIS - news - people) and Sony Corp. <6758.T> and boosting its high-speed Internet sales through its partnership with DSL (digital subscriber line) provider Covad Communications Group Inc. <COVD.OB>
"The companies we're dealing with are Fortune 500 companies like Kodak (nyse: EK - news - people), Sony, Disney. All that will be announced over the next two quarters ... they see the combination of our customer base and their content, online gaming," Polumbo said.
This expansion into new services comes just six months after AT&T sold its cable television unit and scrapped plans to become a one-stop shop for long-distance, wireless, data and entertainment services.
AT&T would now be reselling services and partnering with other providers, which would give it less control and could stymie its bold plans, analysts said.
"Clearly wireless resale was a difficult, low margin business for WorldCom (and) reselling DSL is going to get more difficult as retail DSL prices come down," John Hodulik, an analyst with UBS Warburg, said in a recent research report.
Competition in the telecommunications industry has intensified as long-distance and local carriers entered each other's markets. That pressure helped push AT&T's consumer revenues down 17.8 percent in the first quarter and eroded margins. AT&T's existing product bundles currently account for about 17 percent of its consumer revenues.
The Baby Bells have gotten a head start in offering "all-distance" plans, or unlimited local and long distance calling, in 21 states. Add-on services such as wireless and Internet access are an even more formidable threat. AT&T offers local service in only 11 markets, but it plans to expand to 22 states by the end of the year.
AT&T thinks it can tweak its product mix to be more specialized and more attractive to high-spending consumers. Subscribers who buy multiple services also are less likely to endure the hassle of switching providers, analysts said.
"Extending the portfolio, the bundle, is what we believe will be helpful in the long-term to reducing that (customer) churn," AT&T Chairman David Dorman said.
Copyright 2003, Reuters News Service
Reuters, 05.09.03, 5:05 PM ET
PHILADELPHIA, May 9 (Reuters) - Ma Bell wants to become Ma Everything.
AT&T Corp. (nyse: T - news - people) plans to offer more consumer services, ranging from online content to wireless and high-speed Internet access, to prevent its residential business from becoming as extinct as the rotary dial telephone.
The No. 1 U.S. long-distance telephone company plans to reverse a more than 4-year decline in residential long- distance sales and a formal announcement on the new service packages, or "bundles," could come as early as next week.
"We really need a larger bundle to sell -- that is local, long distance, data, digital content, wireless -- all this becomes interesting to our customers," said John Polumbo, president of AT&T Consumer, during the company's first-quarter earnings conference call. "I plan to take the bundle a lot further than what the (Baby Bells) are doing today."
AT&T wants to use its blue chip brand name and 40-million- strong residential customer base in deals to resell services from other companies. Or it may offer incentives for customers to buy multiple services from it and its partners.
"AT&T still has one of the strongest brand names in the world and a large customer base, which they can leverage by selling bundles and cross selling other related products and services too," said telecommunications analyst Jeffrey Kagan.
AT&T is talking about reselling wireless services, forging pacts with content providers such as Walt Disney Co. (nyse: DIS - news - people) and Sony Corp. <6758.T> and boosting its high-speed Internet sales through its partnership with DSL (digital subscriber line) provider Covad Communications Group Inc. <COVD.OB>
"The companies we're dealing with are Fortune 500 companies like Kodak (nyse: EK - news - people), Sony, Disney. All that will be announced over the next two quarters ... they see the combination of our customer base and their content, online gaming," Polumbo said.
This expansion into new services comes just six months after AT&T sold its cable television unit and scrapped plans to become a one-stop shop for long-distance, wireless, data and entertainment services.
AT&T would now be reselling services and partnering with other providers, which would give it less control and could stymie its bold plans, analysts said.
"Clearly wireless resale was a difficult, low margin business for WorldCom (and) reselling DSL is going to get more difficult as retail DSL prices come down," John Hodulik, an analyst with UBS Warburg, said in a recent research report.
Competition in the telecommunications industry has intensified as long-distance and local carriers entered each other's markets. That pressure helped push AT&T's consumer revenues down 17.8 percent in the first quarter and eroded margins. AT&T's existing product bundles currently account for about 17 percent of its consumer revenues.
The Baby Bells have gotten a head start in offering "all-distance" plans, or unlimited local and long distance calling, in 21 states. Add-on services such as wireless and Internet access are an even more formidable threat. AT&T offers local service in only 11 markets, but it plans to expand to 22 states by the end of the year.
AT&T thinks it can tweak its product mix to be more specialized and more attractive to high-spending consumers. Subscribers who buy multiple services also are less likely to endure the hassle of switching providers, analysts said.
"Extending the portfolio, the bundle, is what we believe will be helpful in the long-term to reducing that (customer) churn," AT&T Chairman David Dorman said.
Copyright 2003, Reuters News Service
