AT&T Business Strategy

AT&T Business Strategy

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AT&T Wireless is the leading wireless telecommunications provider in the US market. The US wireless market constitutes over 243M wireless subscribers. This represents a market penetration of 81%. The wireless market sells mobility of voice and data (video-media, download content and internet access).
The wireless market is distributed between the following major competitors and distinguishing technology.
Verizon Wireless – CDMA, EV-DO
Sprint-Nextel- CDMA, EV-DO
T-mobile - GSM, UMTS

Upon the acquisition and merger of legacy AT&T Wireless by Cingular Wireless and the solidification of SBC, BellSouth and Cingular Wireless, the New AT&T mobility business unit now leads in the current market share narrowly over Verizon Wireless.

Figure 1

AT&T 27.1%, Verizon 26.3%, Sprint-Nextel 23.6%, Other 11.9%, T-mobile 11.1%. Source Forrester Research December 2007.

The Master Strategy for AT&T wireless is to be the only telecom provider their customer would ever need by connecting its customers anywhere – anyway.
COST- AT&T is adequate in this regard. It is positioned to offer competitive pricing to the numerous services it offers. Rollover Minutes, Family Unity Plan
DIFFERENTIATION- AT&T’s exclusive agreement to market and sell the iPhone with Apple Corporation has differentiated itself from its competitors. Utilization of its vast spectrum to offer video conferencing service (video share).
NICHE- AT&T has not engaged in niche market.

The following are the supporting Strategies:
Geographic Coverage- AT&T is positioning itself to be the leader in wireless coverage, identified by the move in the Global markets.
Mix Intensity- AT&T is a leader in wireless products and services by offer voice PTT, voice –IP, video share, HSPDA.
Channel Exposure- AT&T is adequate in its point of sales. They intend to match most competitors in using Radio Shack, BEST Buy, Walmart, Mall locations, high visible real estate traffic.
Service/Satisfaction- AT&T has settle to be adequate in Customer Service by changing is “Customer Rules” to just “Earning Industry Leading Retention”. Although they have made tremendous strides in reducing their churn from 2.1% to 1.6% in two years validating their commitment to provide a better system to their customers after the merger.
Channel Control- adequate
Switching Costs- AT&T allows number portability and maintains the industry practice of 2-year contract commitments. They are adequate in this regard.
Branding/Promotion – AT&T is leading to be the only telecommunication company their customers need by connecting people better than anyone else.

The merger between Cingular Wireless and AT&T Wireless created the largest footprint of any wireless carrier. This merger also established the largest spectrum holding of any wireless carrier of 59 Mhz .

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Spectrum for wireless carriers is a commodity to evolve technology and support capacity. With this amount of spectrum AT&T can leverage a significant amount towards is data services in Enhanced GPRS (EDGE) and its High-Speed Downlink Packet Access (HSDPA). The EDGE network is deployed throughout is market and the HSDPA technology is 30% deployed throughout its network, while all NFL markets are fully deployed. Further efficiencies’ will be realized when the legacy TDMA spectrum is accentuated towards the UMTS system, and GPRS data slots are converted to EDGE data slots.

AT&T will migrate towards operational excellence as its legacy TDMA equipment, billings systems and transport infrastructure are dissolved. The customers currently on this system are mostly businesses that will upgrade to the more efficient data solutions of EDGE or HSPDA. Overall this move will support increases in voice/data ARPU
AT&T has developed an MSOC (Management System Operational Control) process to ensure efficient reaction times to customer care and the demands of the system performance.

AT&T expends a significant amount of resources to create several major programs versed in Leadership, Management and Business Learning:
• Leadership Development Program (LDP) is a two year rotational program for recent bachelor and MBA graduates with outstanding leadership potential. Established in 1988 LDP is AT&T’s flagship leadership development program. The goal of the program is to develop competitive leaders with the skills and experience to perform well in various positions and organizations across the company. Rewards include career development, exposure to key areas within AT&T, frequent developmental feedback and accelerated career growth for successful participants
• IT MATREX (Management Transition Exchange) is the Information Technology hiring program for high motivated individuals. The group consists of recent college graduates in the areas on client/server mainframe and Web development.
• The Financial Leadership Program (FLP) is designed to give individuals the breadth and depth of business experience necessary for a successful career. FLP participants are rotated through high profile decision-making positions in which they work directly with key members of the senior management team of AT&T Finance. This program is centered on entrepreneurial thinking.
AT&T Wireless has successfully executed it strategy growing its Operating revenue by 14%. Through the integration and cleanup of legacy AT&T wireless and Cingular Wireless, churn has been reduced to 1.7%. This is a direct indication of improved value and service to its customers. Contrary to Sprint-Nextel the merger of networks was the best solutions due to the similarities in the GSM technology.
The strategy to enter into a two year exclusive deal with APPLE to market and sell the iPhone has proven successful. Even with the EDGE network the satisfaction of the iPhone has differentiated AT&T from its competitors. The stakes here have been raised and AT&T will look to see even more competition from Verizon, Sprint-Nextel and T-mobile.

Figure 2

Figure 3

AT&T has chosen the right primary strategies to ensure the necessary momentum to gain leadership in market share over Verizon while reducing churn by 20%. In the same regard, Sprint has done an extremely poor job integrating the Nextel customers into their system. Due to the incompatibility of the IDEN network to the CDMA system the cost of integrating the legacy system would involve a replacement on the complete Nextel system. Thus, AT&T should aggressively pursue the most disenchanted legacy Nextel customers by marketing the Push-to-Talk (PTT) technology that AT&T has launched in 2005. AT&T should establish a goal of 1% churn by EOY 2009 with the successful execution of marketing towards the disgruntle Sprint-Nextel customer base, this goal can be realized.
With increases in data ARPU and consumer expectations of LAN type mobility speeds, emphasis on expanding its UMTS/HSDPA network should be a priority. AT&T should take advantage of its landline Fiber networks and use this connectivity in lieu of T1 facilities for improve backbone performance and negate lease capacity issues. Continue the marketing relationship of Apple’s iPhone, due to the 3G version ETA of 2Q08, which will entice the natural upgrade for the EDGE user (further extending the upgrade with another 2-year contract).
Due to ever increasing latencies of improving in-building coverage of high profile residencies due to irrational zoning laws. AT&T should begin to market wireless routers to these areas of the network, whereas mobility calls will route to the home Wifi network when the mobile is within the routers coverage and handoff to the macro system when leaving the routers coverage.

AT&T should modify the point of sales for the iPhone (EDGE version) once the iPhone (3G) becomes available. Currently Apple will not allow the iPhone to be sold outside an AT&T corporate store or Apple store, however, once the 3G version is available efforts should be made to allow the AT&T authorized dealers to market and sell the EDGE version to improve greater iPhone presence and help improve point of sale visibility for this product.

AT&T is not accentuating the breadth of services in its advertisement. Most customers are unaware of the speeds currently associated with the 3G HSDPA Networks. Also unadvertised is the partnership with HBO mobile, which allows only AT&T customers to see all of the HBO popular series (Sopranos, The Wire, Entourage, etc). In 2007 the advent of the Video Share which truly touts the advantages of AT&T spectrum and technology superiority. Due to the vast variety of its customers base the differentiation of AT&T’s services is vital to “Be the Only Telecom Provider, Our Customers would ever need”.
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