Managed Services

AT&T CEO: Cloud Needs Managed Services

Contrary to popular opinion, the cloud isn't commoditizing the network -- in fact, quite the opposite is true, AT&T CEO Randall Stephenson said today. Speaking at the Goldman-Sachs Communicopia conference, he said both cloud services and the Internet of Things are making managed network services and higher-value offerings such as virtual private networks more critical than ever.

Stephenson also told analysts that DirecTV Now, the AT&T Inc. (NYSE: T) over-the-top video service set to launch in about two months' time, has a cost structure that is unique in the industry and thus can generate profits even at an aggressively low price. Built from scratch as a digital delivery system, the app-based service has a very small capex hit and benefits as well from AT&T's aggressive negotiations with content owners as the largest US video service provider, he said. (See AT&T Teams with HBO for Streaming Service and NBCU Jumps on AT&T's New Streaming Services.)

"I'm going to call it thinner -- not thin -- margins than what we are accustomed to," he conceded. "I'm always willing to accept thinner margins when there is low capital intensity in the product."

Because DirecTV Now will be integrated with AT&T's wireless service and its home broadband service, it has the potential to drive further penetration for those offerings or reduce churn, Stephenson said, so that "the lifetime value of a customer with this kind of product is actual quite attractive and very valuable."

Want to know more about carrier IoT strategies? Check out our dedicated IoT content channel here on Light Reading.

Stephenson pointed to NetBond, AT&T's cloud connectivity service, as proof of his belief that cloud services are being commoditized, not network services. NetBond connections are up fourfold, he said, and the traffic over those connections is up eight times, as more enterprises move mission-critical apps to the cloud and require network connections with low latency and higher security. (See SDN Powers AT&T, IBM On-Demand Cloud Connections and AT&T Cloud Strategy Now Focuses on Network.)

"That requires virtual private networks so all of the managed network services that people are saying are going to be commoditized out, it is actually going the opposite direction," he said.

The same will be true for IoT services, such as connected cars and health monitoring, for which latency and service reliability and security are essential, Stephenson said.

"And this is why we think the integrated communications company is so critical -- you have to have mobility, you have to have virtual private networks, you have to have fixed broadband, you have to have security solutions and if you can bring all of that to market then you can address these needs we are talking about," he said.

AT&T's "aggressive" negotiations with content companies produced "win-win" deals that Stephenson said included sharing access to anonymized viewing data from the Internet-connected set-top boxes delivering its IPTV service. Content companies want that data to help develop new advertising models and to influence new content.

— Carol Wilson, Editor-at-Large, Light Reading

Ford65 10/19/2019 | 9:17:31 AM
Best and managed services The actual purpose of the clouds is to support the Information technology. I think that the IT is rotten to the core and has great need to manage it well. See edubirdie com rating before hiring professionals for your papers. Because the every country's economy depends upon the technology.
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