AT&T sees its continued role in life as being a connectivity provider, according to the carrier's chief strategy officer, but new content deals are clearly where he sees the biggest opportunities.
Speaking Wednesday at the Oppenheimer & Co. Inc. Technology, Internet & Communications Conference, AT&T Inc. (NYSE: T) Group President and CSO John Stankey said that the carrier's value proposition will remain in providing connectivity going forward, even as the network becomes more virtualized and software-centric. (See AT&T Spotlights Early SDN Efforts.)
That said, it's clearly not content being a dumb pipe, as Stankey spent most of his time on the Oppenheimer stage discussing the changing landscape of content. AT&T's customers want to be able to watch entertainment, the number one use for mobile phones -- largely video, but also music -- anywhere they go on their own terms, he said.
"The reality of the industry today and how content is licensed and sold is [that how mobile users consumer content] doesn't fit elegantly into that model," Stankey said, adding that customers' desire for content is so strong that they are willing to pay for multiscreen content as well.
"It's important we understand how customer buying decisions will be linked to content over time," he continued. "Just like today, the number one influencer of a customer's decision about why they buy broadband is linked to their television services in their home, I think over time in the mobile space there will be a tighter link between what kind of content people can consume and how easily they can get at what they want to watch."
He expects, and hopes for AT&T's sake, that the business model will change dramatically, as will the relationship between content providers and advertisers. It's one big reason why AT&T's acquiring DirecTV Group Inc. (NYSE: DTV) -- for the scale to meet its customers' evolving consumption patterns, and to have influence with its partners. (See AT&T to Acquire DirecTV for $48.5B.)
Stankey believes mobile content consumption will largely mirror in-home viewing, but thinks that some content will be unique to mobile, including a rise in popularity of short-form content. AT&T plans to work with content providers to make sure this is available to customers when they want it (at a price). It's also the reason it invested in Chernin Group, the strategy man said. (See AT&T Joins OTT Video Parade and AT&T's OTT Venture Buys Creativebug, Calls Itself Otter Media.)
New content agreements and business models will also enable AT&T to begin offering multicast video, which -- like Verizon Wireless -- it expects to do throughout next year. Stankey said the carrier would start with targeted deployments in specific areas where it made the most sense. (See Verizon's Multicast LTE Video to Arrive in 2015 and AT&T Investing in LTE Video Despite Capex 'Freeze'?)
"Clearly one thought process we had as we get more scale on the content side and normalize our content agreements is, we'd like the flexibility to use that technology on a broader application," he said.
— Sarah Reedy, Senior Editor, Light Reading