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He said carriers need to stop focusing on luring in new subscribers and instead set their sights on getting existing customers to use more of the network

AT&T's CEO recently said that carriers could no longer afford to pay subsidized prices for subscribers' new smartphone hardware.
 
According to a new report from CNET, AT&T CEO Randall Stephenson told an investor conference in New York City on Tuesday that subsidies for high-end smartphones must end.
 
More specifically, Stephenson sees smartphone market penetration at 75 percent in the U.S., and it's expected to climb to 90 percent "soon." This kind of growth, he said, means that carriers need to stop focusing on luring in new subscribers and instead set their sights on getting existing customers to use more of the network.
 
"When you're growing the business initially, you have to do aggressive device subsidies to get people on the network," said Stephenson. "But as you approach 90 percent penetration, you move into maintenance mode. That means more device upgrades. And the model has to change. You can't afford to subsidize devices like that." 
 
Before Apple's iPhone launched in 2007, wireless carriers placed their focus on bringing new subscribers in to the network. Once the iPhone was released, it was made exclusive to AT&T initially, where the carrier offered unlimited data plans through its 3G network as a way of drawing in data-hungry customers who wanted the new iDevice. 
 
In 2010, AT&T was the first carrier to eliminate the unlimited data model and move to tiered plans instead.
 


Randall Stephenson [SOURCE: phonearena.com]

But the goals have changed for AT&T. Now that the iPhone and other smartphones have flooded the market, it wants to move away from subsidized pricing as a way of building customer growth and instead help customers make better use of its network. 

One of the ways it has done this is through its Next plan. This allows customers to purchase a new handset with no money down and pay a monthly fee for 20 months as part of their wireless bill. After one year, the handset can be traded in for an upgrade to newer hardware. From there, a new 20-month cycle starts based on the price of the device.

"If you are a customer and you don't need to upgrade your device, you can get unlimited talk and text and access to the data network for $45 all-in," said Stephenson. "You can use your own device or finance it. I think this will be very powerful. It's where we see the market going."

AT&T also recently reduced off-contract prices and changed its base costs for each data tier. 

Stephenson added that AT&T will be looking more toward the lower end of the market now that capacity problems have been addressed for the high end (thanks to LTE). Part of the low-end strategy is utilizing its latest purchase of Leap Wireless, a prepaid carrier that AT&T purchased for $1.2 billion back in July of this year.

"You will see us go very aggressively in the prepaid market," said Stephenson.

It seems like AT&T has been watching T-Mobile's latest "UnCarrier" moves. T-Mobile eliminated contracts for reduced cell phone plans in March and was the first to introduce an early phone upgrade program in July. Then, in October, it started offering a free unlimited international text and data plan.

More recently, T-Mobile announced Tuesday that it would be dropping down payments for Apple's new iPhone 5S and iPhone 5C handsets, as well as certain iPad models. It's a limited holiday offer, though. 

Source: CNET



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By DT_Reader on 12/11/2013 3:57:38 PM , Rating: 2
Sure, AT&T wants to stop subsidizing the phone, but that's just one bullet in the presentation. Here's the real message:
quote:
[AT&T] wants to move away from subsidized pricing as a way of building customer growth and instead help customers make better use of its network.

What do you think "make better use of its network" means? It means nothing less than "use more billable airtime". They want more $$$/subscriber, so they want their subscribers to use their phones more.

Knowing AT&T, that means offering more stuff for their subscribers to do without bothering to ask their subscribers what they really want, resulting in lots of expensive "features" that their subscribers don't bother using. I wouldn't be at all surprised to learn they plan on resurrecting the idea of forcing their subscribers to use an AT&T portal to access the web AT&T wants them to see, rather than letting them access the web they're used to. In other words, expect them to attempt to return to the days of CompuServe and AOL.




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