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AT&T CFO Shrugs Off Google Fi as Limited

Sarah Thomas
4/22/2015
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AT&T CFO John Stephens shrugged off Google's new Fi MVNO on the carrier's earnings call on Wednesday, implying it's too limited in devices, distribution and customer care to pose a threat.

"It's just another one of the plays in the environment out there," Stephens said, noting that AT&T Inc. (NYSE: T) likes to present more device choices to its customers and that they value distribution and customer care, two things that Google (Nasdaq: GOOG) Fi is limited in.

Google confirmed Thursday it's launching a low-cost mobile service that relies on 1 million public WiFi hotspots with fallback to Sprint Corp. (NYSE: S) or T-Mobile US Inc. 's networks when WiFi is unavailable. The service will only work on the Google Nexus 6 at launch. (See Google's WiFi-First Mobile Service 'Fi' Is Here.)

Stephen's sentiments about it echo those made by Verizon Communications Inc. (NYSE: VZ) CFO Fran Shammo in the fourth quarter last year that its Android partner is "just another competitor." (See Verizon Ready for Google MVNO Challenge.)


For more wireless first quarter earnings coverage, visit the dedicated mobile content page here on Light Reading.


They might be playing it cool, but Google's Fi is likely to add to the pricing pressure the big two operators are already feeling, especially as subscriber growth slows for the big two. (See AT&T Reports Q1 Revenues of $32.6B and Verizon Reports Q1 Revenues of $31.98B.)

For the first quarter, AT&T reported wireless revenues of $18.2 billion, up 1.8% over last year, but wireless profits were down 12% to $4.4 billion as a result of the move to subsidy-free Mobile Share Value plans that discount the service price. (See Verizon Focuses on Cashing In on LTE.)

The carrier did, however, report its best-ever first-quarter churn at 1.02%, down from 1.07% this time last year. Stephens said this metric was helped by Mobile Share. It now has 19.4 million customers, representing 70% year-over-year growth, on these data bucket plans with an average of 2.9 devices per account and half on 10GB/month or higher plans.

AT&T managed to add 441,000 postpaid subscribers, owing to its strength in tablets, with 711,000 added in the quarter, and offsetting a decline in feature phones. Notably, the carrier also added 1 million connected devices, 684,000 of which were connected cars. Stephens said he sees a lot more growth coming from the Internet of Things, driven by its LTE network that reaches 308 million PoPs.

Going forward, Stephens said to expect promotional activity from AT&T as always, but it won't be doing anything drastic in response to the new competition. "It is a competitive environment and we have to be ready to handle whatever situations, issues, offers come out from other parties in this environment regardless of the logic that may or may not be behind them," he said.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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MikeP688
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MikeP688,
User Rank: Light Sabre
4/23/2015 | 4:19:25 PM
Re: IoT for AT&T
When you have households that have a multitude of cell phones, there is only so much "monetization" one can make--and iOT is the next big thing--the question is on execution though.    
MikeP688
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MikeP688,
User Rank: Light Sabre
4/23/2015 | 4:18:16 PM
Re: IoT for AT&T
@danielcawrey:   I am curious as to why you think, "..I am not their target customer"?    Since they're part of Sprint, it should not be as problematic as you envision it? 

 

 
MikeP688
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MikeP688,
User Rank: Light Sabre
4/23/2015 | 4:15:09 PM
Re: Shrugged (Brief Thoughts)
@jcadler has a nice "spin" on it all.    AT&T has no choice but to note how "limited" this is.  The question is whether Google wil do this right or somehow bungle this as it did with Google Glass--no matter what the spin they wish to put on it.  In some ways, the current spin by AT&T's CFO has some merit because it will be limited to Nexus6 Phones--and the other question is how they're going to "distinguish" themselves with the likes of FreedomPop that also is in the same business (running a Virtual Mobile Network)--and whether Sprint in fact is able to continue to absorb such "Virtual Networks".

Still fascinating though to assess and be witness to......
jcadler
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jcadler,
User Rank: Light Beer
4/23/2015 | 2:52:03 PM
Shrugged
Step 1. "Deny"

Step 2. "Call it a niche"

Step 3. "Repackage something so you claim you have it, too"

Step 4. "Match with something and call it obvious"

Step 5. "Get beat and repeat."
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/23/2015 | 12:11:11 PM
Whistling in the dark
AT&T is whistling in the dark here. Google Fi is a big deal and will exert significant downward pricing pressure. 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
4/22/2015 | 8:48:30 PM
Re: IoT for AT&T
Google Fi makes sense to me, although I don't think I am their target customer. I can see people wanting to leverage wifi for cheaper smartphone service, albeit I'm not the one who would want to deal with downsides like service disruptions. 
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
4/22/2015 | 7:20:09 PM
IoT for AT&T
I think this quarter demonstrates that IoT is where it's at for AT&T. It has 20M connected devices on its network, but sees that as just the beginning. Especially with shifting dynamics amongst smartphone ownership, IoT will become a lot more important -- as will getting more revenue out of it. 648,000 connected cars is pretty impressive too.
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