Light Reading

Who Needs a Strategy

Cutting Loose
Cutting Loose
Cutting Loose

Doing a quick news-check on the Big Three U.S. wireless carriers, we find them, like the eponymous trio in the great 1999 Gulf War film Three Kings, trying to hold onto a big stash of gold while wandering in an uncharted and unfamiliar wilderness, taking potshots from all sides.

The stash of gold, in this admittedly belabored metaphor, is the huge and growing number of mobile subscribers plus the largely still-untapped market for wireless enterprise services in North America. The wilderness would be the increasingly complex competitive landscape for wireless service providers, while the potshots are coming from WiFi providers (including the 800-lb. gorilla called Google), WiMax startups (including Craig McCaw's well-funded ClearWire), and other advanced technologies that could do for conventional 2G cellular networks what mobile phones did to Plain Old Telephone Service: render it antiquated very rapidly.

Consider recent strategic moves by the Big Three:

  • With the closing of its BellSouth acquisition last week, AT&T Inc. (NYSE: T) said it will deep-six the Cingular Wireless brand, arguably the most recognizable and trusted marque in wireless telephony. How come? AT&T seems bent on reproducing the Ma Bell monopoly, with all the connotations of indifferent customer service, lack of innovation, and bullying corporate tactics that entails. AT&T management expects to save millions in operating expenses by consolidating the BellSouth, Cingular, and AT&T marketing efforts under one brand — but what will it lose in terms of customer loyalty and "brand equity" by junking Cingular? And, oh yeah, Cingular announced an exclusive two-year tie-up with Apple Inc. (Nasdaq: AAPL)'s hot new iPhone — a device that works over Cingular's EDGE network rather than higher-speed 3G systems such as EV-DO or HSDPA. Many of the newer smartphones coming out operate on the faster networks. (See Cingular: The Call of the WiFi.)

  • Verizon Wireless said today it is spinning off its wireline assets in three Northeastern states to focus on its faster-growing wireless business. That's swell. But, what's taking so long? Verizon president Lawrence Babbio said almost three years ago that the company would unload as many as a quarter of its "lower-growth assets," i.e., landlines. Unfortunately, selling telephone lines today is not as simple as putting your waterbed up for sale on Craigslist. Verizon's sale of 700,000 phone lines to Hawaiian Telecom in 2005 for $1.65 billion set off months of service disruptions for former Verizon customers, and HT lost $32 million in the first quarter after the sale. In upstate New York, opposition from telecom unions blocked a deal to sell off landlines a few years back. Verizon still has 46 million landlines, down from 54 million in 2004. Verizon would dearly love to concentrate on high-margin, fast-growth wireless broadband and residential triple-play services, but the POTS anchor still slows the company's ship. (See Verizon Claims Q3 Wireless Supremacy .)

  • Sprint Corp. (NYSE: S), meanwhile, just hired a new senior vice president for strategy. "Strategy," hmm, isn't that what the CEO and the board are supposed to take care of? Of the Big Three, Sprint is clearly the most challenged in terms of subscriber growth and short-term revenue/earnings prospects — Sprint shares have lost 29 percent of their value since last April. But at least Sprint, which has bungled the integration of Nextel's iDEN network with its own systems, can claim to have a strategy: It's focusing on the wireless broadband future, as evidenced by its $3 billion commitment to building a nationwide WiMax network by the end of 2008. (See CES: Sprint Streams WiMax.)

To summarize, with the exception of Sprint, a company rapidly losing ground in its core business, the Big Three carriers are largely strategy-challenged. They're used to sitting back and signing up subscribers to restrictive multi-year contracts, squeezing dollars out of airtime. They're essentially in the business of restricting choice in an environment where average revenues per user are declining and communications choices are exploding. The carriers need to shift to a customer-friendly model of providing high-value services on innovative devices, or they'll be in the position the Baby Bells were a few years back.

Can they do it? Well, they've got huge customer bases (and growing ones, in the case of Verizon and Cingular, er, AT&T) to sustain them through the transition period. The real question is whether they have the management will and the creative firepower to pull it off.

— Richard Martin, Senior Editor, Unstrung

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Telecom Innovators Video Showcase
Automate, Scale & Create With Juniper's vCPE Solution

10|1|15   |   6:34   |   (0) comments

Join Kireeti Kompella, Juniper Networks CTO, and Steve Saunders, Light Reading Founder and CEO, as they discuss Juniper Networks' approach to NFV showcased with a turnkey vCPE solution, which demonstrates how service providers can use automation to rapidly deploy services.
LRTV Interviews
Gigabit Europe: Day 1 Takeaways

9|29|15   |   05:47   |   (5) comments

Light Reading's Ray Le Maistre and Iain Morris sup a beer and discuss some of the key takeaways from the first day of Gigabit Europe 2015.
LRTV Interviews
Gigabit in Europe

9|29|15   |   04:24   |   (0) comments

At the Gigabit Europe 2015 event in Munich, Heavy Reading's Graham Finnie talks about the availability of gigabit broadband in Europe.
Women in Comms Introduction Videos
AT&T's Band of Women

9|28|15   |   4:36   |   (0) comments

Brooks McCorcle, the president of AT&T's partner solutions divisions and a mathematician by trade, shares stats on AT&T's diversity and advice on how to create your own band of women at work.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Communication service providers realize that an ICT transformation is critical to their long-term survival, but most haven't yet committed to making it happen.
Hot Topics
Verizon's Go90 Is Live – Will Anyone Watch?
Mari Silbey, Senior Editor, Cable/Video, 10/1/2015
Eurobites: Dunroamin'
Paul Rainford, Assistant Editor, Europe, 10/2/2015
Sprint to Cut Up to $2.5B in 6 Months
Sarah Thomas, Editorial Operations Director, 10/2/2015
McKinsey: Women Less Likely to Advance at Work
Sarah Thomas, Editorial Operations Director, 10/1/2015
TiVo Takes Aim With Bolt
Mari Silbey, Senior Editor, Cable/Video, 9/30/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
Hold My Calls, Indefinitely Click Here