The Return of Unlimited, this time with even more video
By Roger Entner on January 16, 2016
AT&T is launching an aggressive new offer providing unlimited voice, text and data to customers who have AT&T wireless and DirecTV service. The service is competitively priced at $100 for the first line, $40 for the second and third line, and free for the fourth line. Immediately available to 4.5 million AT&T wireless customers who also have DirecTV as well as new customers for a combined offer, the immediate and most logical target segment is the 21 million AT&T wireless customers who do not have DirecTV and the 15 million DirecTV customers who do not have AT&T wireless service, who are offered significant incentives to bundle. The unlimited data offer allows consumers to watch their DirecTV service or any other video service they have access to on the go as if they are at home in the video quality of their choice. The larger the screen they watch mobile video on, the more significant the noticeable visual difference.
AT&T is able to provide such an offer as it set itself up a lot more broadly than its competitors: nobody else has wireless, TV, fixed internet in 21 states, as well as home automation. It’s competitors are increasingly single or dual point solutions that cannot match AT&T’s full product portfolio. For AT&T, the current state is the result of deliberate strategic choice made by Randall Stephenson and his senior team to provide customers a comprehensive, integrated solution from one provider rather than to ask them to create a solution based on individual services from different providers that the consumer has to integrate themselves. AT&T as an operator is following the same basic strategy as Apple and Microsoft who believe that an integrated user experience designed with the same vision will create a better user experience and has a better chance of creating product and service combinations that are more useful and satisfying than one-off stand-alone product and services. The difference is AT&T is approaching it from the network and connectivity starting point, whereas Apple and Microsoft begin from the OS and device point. The clearer the vision, the further the reach, the better integrated, the greater is the impact on customer’s lives. As the strategy is taking shape in the form of integrated offers, the results depend on execution, satisfying the latent demand by customers who have an increasingly mobile lifestyle.
It will be interesting to see how competitors will respond to this offer. Competition has driven the competitors into uneven product match-ups as management decisions and circumstances created differentiated competitors who have limited ways to respond to such an offer.
When AT&T closed the DirecTV deal, Sprint offered DirecTV customers a year of free Sprint service. Who knows what Sprint will offer this time? One year? Two years?
The cable companies have a similar content line up they lack the partner to provide a similar offer as they partnered with Verizon Wireless with the option to launch an MVNO. While Comcast has activated their MVNO option three years after they close their deal with Verizon Wireless, it might take a while longer for Comcast to launch it. T-Mobile, based on the Binge On offer would be a more fitting partner for cable, would be ecstatic if the cable providers would come hat in hand looking for a closer partnership. Can you imagine the tweet storm coming from John Legere?
Verizon could probably match AT&T in its FiOS footprint in the Northeast, but that in itself would make the situation Verizon is in more apparent than it is already – being an increasingly pure play wireless service provider with a limited TV footprint. Its answer to the increasingly converging telecom and media world, Go90, is considerably narrower in terms of content and more focused on just one demographic segment than AT&T’s video offer, which also limits the upside.
The closest in terms of unlimited is T-Mobile with its BingeOn offer. While it is a “bring your own video” offer and keeps video quality at DVD levels, its strength and weakness come with the power and restrictions of the associated video service and the associated screen. While it is understandable from an economic and network loading perspective, BingeOn is a tradeoff. The larger the screen and the greater the resolution of video stream, the more visible the quality restriction becomes for consumers, but ultimately consumers should be able to make the choice what is right for them.
AT&T is able to offer an unlimited data plan again as is bringing more spectrum online most noticeably in the WCS band, the expectation of more spectrum becoming available through the auction process, the re-farming of 2G spectrum that is significantly less spectrally efficient than 4G LTE, as well as redesigned its data network to be a video first network. The focus on DirecTV/AT&T wireless customers as well as this being a limited time offer will lessen the impact on the network. When the load on the network becomes too large, AT&T can simply conclude the open-ended promotion.
Roger Entner and his analysts are known around the globe as some of the most respected telecom experts.Full bio →
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