CSR: 404 AT&T: FEASIBILITY PLAN Group 91 | P a g eIntroductionOur business case takes a look at AT&T, INC position in the marketplace specifically concerning theirfamily plans targeted at the consumer market. AT&T is publically traded national provider of wirelesstelecommunication services in the United States that was founded in 1983 from a combination of babybells. The company currently trades on the New York Stock Exchange and is valued at over 173.13 billiondollars as of November 18, 2011. Their mission is to connect people with their world; everywhere theylive and work, and do it better than anyone else.TechnicalTechnology has been at the forefront of the wireless communication industry for years. As the internetchanged from static webpages to large dynamic web environments, consumers desire to access themincreased, and the use of mobile broadband increased exponentially.On June 29, 2007, AT&T and Apple took the first step to really address the changing wirelessenvironment by released a revolutionary iPhone that has continued to change how people use their cellphone. Not only did this phone allow consumers to surf the internet easier that every before, Appleintroduced the concept of an application driven device to consumers for the first time. Since the releaseof the original iPhone, applications have been a dominate force in the cellular marketplace. Differentoperating systems have emerged such as Android, Blackberry OS 7, and Windows Phone 7 that all usethe same concept. AT&T has invested over 70 million into AT&T Foundry Innovation centers that havebeen opening up worldwide to help create new development tracks which include teleHealth, HTML5,new ways to deliver rich media, advanced check-in and location-based application, and applicationprogramming interfaces (APIs) that make network services easily available to application developers.Within these centers, developers to access to prime network capabilities, test beds, technology experts,and project coaches which help them being their ideas to market faster than ever before.Secondly, AT&T is rolling out a dynamic multi-layered 4G network that will allow consumers to surf theweb faster than ever before. This multi-layered network uses HSPA+ and LTE to deliver speedperformance on a larger scale allowing consumers to receive a most consistent mobile broadbandexperience that supports simultaneous voice and data connections and higher speeds than the othercan provide outside their LTE footprint. 11(More than one Acronym for Speed, http://shar.es/bBmO1)
CSR: 404 AT&T: FEASIBILITY PLAN Group 92 | P a g eTo accommodate consumer demand, AT&T partnered with different cell phone manufactures andincreased the quality of their network leveraging their technological benefits to their customers.FinancialWith execution across key business areas, AT&T has driven industry-leading growth in the past 5 years.According to their 2010 Annual Report2Wireless connections increased by 8.9 million which is the largest gain in historyWireless data revenues increased by 28.7%, the strongest growth among major carriersConsolidated revenues improved from 2009Earnings per share grew by over 63%Company raised its quarterly dividend for the 27thconsecutive yearIn addition to the above highlights,AT&T committed nearly $70 billion to get more spectrum andcontinue to build out its mutli-layered 4G network. Currently, AT&T and T-Mobile are in talks withmultiple government agencies as they work out the details of the proposed 39 billion dollar that wouldcombine companies and position AT&T as the largest carrier in the U.S.Areas of concern for AT&Ts financial performance surround government regulations, labor contacts, andcompetition. If AT&T network require that towers are build and wireless spectrum is allocated so theymay distribute it among their customers. Currently, the whole industry is experiencing spectrum churchwhich is a termed coined by AT&T to describe the large increase in demand for spectrum, but thegovernment lack of allocation. Secondly, AT&T is one of the largest union based employers in thecountry. These contracts must be renegotiated every couple years and could risk strike in key businessareas, or increase salaries and wages in future. Lastly, competition is fierce in the wirelesstelecommunication industry. If AT&T does not continue to innovate in terms of network technologies,device offerings, and rate plans, they will see net losses in wireless subscribers for the first time indecades.IndustryThe wireless telecommunication industry has seen amazing growth and will continue as manyconsumers are disconnecting their landline services to be connected wirelessly.The major players in theindustry saw revenues of 204.5 billion dollars with profits of 13.9 billion in 2010 with annual growth over2(2010 AT&T Financial Performance Snapshot, http://www.att.com/gen/investor-relations?pid=19250)
CSR: 404 AT&T: FEASIBILITY PLAN Group 93 | P a g ethe last five years of 3.9%. 3The chart below shows an overall view of the industry structure rated onmany different topics.Figure 1.1 Wireless Telecommunication Industry Structure segmented by topicsTopic StageLife Cycle Stage GrowthRevenue Volatility LowCapital Intensity HighIndustry Assistance NoneConcentration Level HighRegulation Level MediumTechnology Change HighBarriers to Entry HighIndustry Globalization LowCompetition Level HighSource: Wireless Telecommunication Carriers in the US, ISISworld,http://clients.ibisworld.com/industryUS/default.aspx?indid=1267Currently the industry’s life cycle stage is within the growth stage which is determined by strongconsumer demand for wireless telecommunication services, main components of the industry receivingtechnological innovation, new products and services beingproduced at a rapid rate, and industryrevenue is growing faster than the economy.The ProductThe purpose of its products has changed as technology has advanced over the years. It has developedfrom a tool used to transmit voice and simple text based messages to a network can connects people,places, and things using emerging devices and interactive applications. There are 3 segments of devicesthat family can choose which include basic phones, messaging (feature) phones and smartphones. Arecent survey done by The Nielsen Company in September 2011 shows 52% of new cellphone buyerschoose a smartphone over a feature phone4which deeply integrates the device into a consumer’slifestyle and reaps higher average revenue per subscriber for the wireless carriers. With this level ofinnovation, adoption and increase revenues, their product is position to sustain their business within thenext five years.3(Wireless Telecommunication Carriers in the US, ISISworld, http://clients.ibisworld.com/industryUS/default.aspx?indid=1267)4(In U.S. Market, New Smartphone Buyers Increasingly Embracing Android, http://blog.nielsen.com/nielsenwire/online_mobile/in-u-s-market-new-smartphone-buyers-increasingly-embracing-android/)
CSR: 404 AT&T: FEASIBILITY PLAN Group 94 | P a g eCompetitionThere are 4 national players in the industry which include Verizon Wireless, AT&T INC, Sprint NextelCorporation, and Deutsche Telekom AG, better known as T-Mobile. Their market share can be found infigure 2.Figure 2. Wireless Telecommunication Market Share in 2010Company Verizon Wireless AT&T INC Sprint Nextel T-Mobile OtherMarket Share 32.3% 29.8% 16.3% 12.8% 8.8%Source: Wireless Telecommunication Carriers in the US, ISISworld, http://clients.ibisworld.com/industryUS/default.aspx?indid=1267Verizon Wireless is the only company fairy well among the competition. Sprint Nextel is still recoveringfrom a near bankruptcy during the initial downturn in our economy, and the owner of T-Mobile,Deutsche Telekom AG, has been actively seeking approval to merge with AT&T for the last eight monthsas it looks to exit the U.S. market. There are other regional carriers which account for 8.8% of themarket share in the U.S. but none of them hold a significant amount of market share as one company.In terms of Family Plans, all major players are bundling voice, messaging, and data packages together tosave additional money as a family grows. Sprint Nextel and T-Mobile differentiates themselves based onbeing a low –price providers while still offering unlimited data plans. On the other hand, Verizondifferentiate itself on the tiered data plans with thereliability of its 3G network and the speed of its new4G LTE network.AT&T looks to differentiate itself across all three packages by allowing your unused minutes to rolloverto the next month called Rollover Minutes, allowing plans with unlimited messaging to have unlimitedcalling to any mobile carrier called Mobile to Any Mobile, and using lower cost tiered data plans calledData Plus, Data Pro 2GB, and Data Pro 4GB. These methods allow the customer to select a plan tailoredto their current needs.ConclusionThrough embracing technological change, and being at the forefront of emerging devices, they havegiven themselves a head start among their competitors. In this fast paced industry, they are making theright choice by continuing to invest billions of dollars in innovation and mobile broadband. These thingswill allow them to continue to connect their to their loves ones for many years to come.
CSR: 404 AT&T: FEASIBILITY PLAN Group 95 | P a g eBibliographyIn U.S. Market, New Smartphone Buyers Increasingly Embracing Andriod. (2011, September). RetrievedNovember 07, 2011, from Nielsen Wire: http://blog.nielsen.com/nielsenwire/online_mobile/in-u-s-market-new-smartphone-buyers-increasingly-embracing-android/Wireless Telecommunication Carriers in the US. (2011, September). Retrieved November 7, 2011, fromISISWorld: http://clients.ibisworld.com/industryUS/default.aspx?indid=1267AT&T, INC. (2011). 2010 AT&T Financial Performance Snapshot. Retrieved November 08, 2011, fromAT&T 2010 Annual Report: http://www.att.com/gen/investor-relations?pid=19250Nonovan, J. (2010, December 01). More Than One Acronym for Speed. Retrieved November 8, 2011,from AT&T Innovation Space: http://shar.es/bBmO1