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AT&T Unity: Big deal, or just big news?

AT&T’s Unity was the big news yesterday.  It’s a pricing plan that makes it possible to for AT&T Wireless customers to call AT&T Landline customers for free, without incurring any wireless minute charges. They can already call other AT&T Wireless customers for free.  Now the deal has been extended to landline, and you get a unified bill in the mail each month.  The gamble, of course, is that the AT&T customer base will buy their triple play bundle of services from AT&T, for one flat fee, and encourage everyone they know who isn’t an AT&T customer to become one. 

It’s not flat-rate to every line on every network.  Naturally, because AT&T has to terminate those calls on their competitors networks, they don’t want to incur the cost, nor fatten the other guys coffers.  In my opinion, this radically limits the appeal.  Customers would flock to a one-rate wireless / wireline plan, but will they change their behavior for “son of friends and family”?

Om Malik views Unity as a desparate move.  Equipped with graphs and charts that even Ross Perot would be proud to own, Om presents a looming disaster scenario as he notes that wireline minutes are down 40% since 2001.  More alarming for AT&T shareholders is that overall minutes (wireline and wireless) are down 15% as well.  Is it really possible that people are talking less?

In his op-ed3, Daniel Berninger pointed out that there has been a 40 percent decline in wireline minutes since 2001, according to FCC data. If you add all the wireless minutes to the total talk time, the total minutes are down 15 percent over past five years. “This means we either communicate less than five years ago or the Internet (e.g. email, IM, VoIP) is taking traffic away from the PSTN,” he points out.

Andy Abramson’s view is more optimistic.  For Andy, this is AT&T moving to reclaim market domination through better customer service. 

It is a move to reclaim market domination through customer billing and services simplification. In many ways this pre-empts the cable MSO’s moves and in other ways tells all the mobile players without an existing land line play that matters (T-Mobile, Sprint, numerous regional carriers) that now with Cingular and AT&T under one roof, taking customers back, or keeping them from leaving (reducing churn) is the highest priority for the merged company. By using the unified billing concept the combined entity will likely save millions off the bat, but also by saying they no longer have to bill you by the call says that they’re now one big network too. It also means that one grade of call quality will be assured, that you talk to one customer service person and that neither side can blame the other for issues any longer.

The cost savings of a unified bill may be real, but it’s not true that this entity won’t bill you by the call.  Not every telephone user in the US is an AT&T customer.  That means AT&T Unity customers will still be getting a sheaf of paper each month showing all the charges incurred to reach folks with other carriers.

This is a big cross-selling opportunity, and a big public relations exercise, but likely not a big deal.  For carriers, bundles have historically hit the bottom line hard without attracting new subscribers.  They’ve been an effective means to staunch the bleeding when cancellations are trending upward, but nothing more.  Expect management to try something new in a couple of quarters when the profits drop.

{ 5 comments… add one }

  • Alec January 20, 2007, 8:12 am

    I don't think it's a disruption at all, Jonathan. It's a rear guard action to encourage existing AT&T customers to stay.

  • Alec January 20, 2007, 10:35 am

    I think AT&T customers will benefit, no doubt. It's the AT&T shareholder that is going to suffer, and that's because this action will likely not lead to any substantial number of new subscribers.

  • Jonathan Roberts January 20, 2007, 11:04 am

    I don’t see the big disruption here. If you already must have an unlimited land line plan, what are you gaining? No penalty for cell phone minutes? With thousands of roll-over minutes anyway on Cingular, is this even an issue for most consumers?

  • Jonathan Roberts January 20, 2007, 1:29 pm

    Thanks, Alec.

    Do you see any benefit to the consumer or is this strictly self-serving to AT&T?

  • roderickm January 23, 2007, 1:37 pm

    "wireline minutes are down 40% since 2001"

    The PSTN wasn't just used for voice. Many modem users have migrated to DSL or Cable internet services in the past five years. (Seen an AOL CD lately?) This may seem a minor factor, but modem calls are typically much longer than voice conversations. I can easily see how modem users migrating off the PSTN to DSL/Cable and competition from wireless providers have hit wireline minutes so hard.

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