Vendor Focus: AT&T

Updated: February 01, 2010

This analysis is presented to align with the key solution and vendor characteristics identified as critical to buyers in the Focus Research Methodology. These include product, cost and vendor considerations.

Product Considerations: Where mobile access is concerned, AT&T's key "product" is its network. In recent discussions with Focus, AT&T executives stressed repeatedly the company's commitment to extending coverage and increasing speeds and reliability. Even more recently, AT&T announced plans to spend some $2 billion in 2010 on enhancements to its wireless network.

However, especially since it became the exclusive carrier supporting Apple's iPhone, AT&T has also become a leading provider of the very devices creating increasing demand on carrier network capacities. Focus expects the challenge of simultaneously growing and meeting network demand to increase as electronic book readers such as Amazon's Kindle and new multifunction devices such as the new Apple iPad emerge.

So far, AT&T's challenges in this regard have been more highly publicized than most, largely due to its exclusive support for the riotously successful iPhone platform. And while data users have publicly complained about download speeds, voice service users have also complained about uneven coverage and dropped calls, even in major metropolitan areas such as San Francisco and New York City.

AT&T has taken and is taking specific steps to address these concerns. The company recently announced expanded support for High-Speed Packet Access (HSPA) 7.2. That technology is designed to enable faster data connections for smartphones, netbooks and other mobile computing devices. (T-Mobile also recently announced expanded support for HSPA 7.2 as well.) However, Focus believes AT&T and other leading carriers must effectively address real and perceived issues related to call completion and quality, even while beefing up the data handling abilities of their networks.

With the launch of Apple's iPad, AT&T and Apple have apparently relaxed previous restrictions on VoIP calls. VoIP applications for the iPhone (and presumably iPads equipped with 3G network connectivity) have been updated with the ability to place calls on AT&T's 3G network and not just over Wi-Fi connections. Focus believes that this is another move that will please many users, but only if it doesn't strain AT&T's network capacity further or cause or contribute to inconsistent service levels.

Cost Considerations: Also with the launch of Apple's iPad, AT&T announced new data plan pricing. An unlimited data plan that includes access to AT&T's thousands of Wi-Fi hot spots will be priced at only $29.95 per month, while a plan capped at 250 megabytes of data per month will cost only $14.95 per month. In addition, AT&T recently announced so-called "unlimited talk" plans priced beginning at $69.95 per month, and unlimited voice and data plans for users of iPhones and other smartphones priced starting at $99.95 per month.

Focus believes these prices represent significant reductions of previous prices, and direct competition for new prices also recently announced by Verizon. However, Focus believes that interested users should look carefully at what data services are and are not permitted by AT&T before signing any new contracts. For examples, despite promises to enable "tethering," or the use of a smartphone and the AT&T network to connect computers to the Internet, that is one of the functions specifically forbidden by AT&T's most recent terms of service.

Vendor Considerations: Users and observers can freely debate the dueling advertising claims made by AT&T, Verizon and other competitors. However, Focus believes that there is no debating the fact that AT&T is committed to remaining a leading wireless carrier of both voice and data services. In fact, AT&T has asked the US Federal Communications Commission (FCC) for permission to drop support for the traditional public switched telephone network (PSTN) and "plain old telephone service" (POTS) entirely. AT&T wants the FCC to set a deadline by which it and other carriers can shift all of their marketing, research and development efforts to networks based entirely on Internet Protocol (IP) connections, both wired and wireless.

Focus believes that whether or not the FCC acquiesces to AT&T's request, it is the strongest possible indicator of AT&T's intentions and plans. The future of voice and data communications is going to built on an IP foundation and increasingly wireless, and AT&T is clearly committed to spearheading developments in both arenas. (While users of and revenues from wireline services continued to decline during the fourth quarter of 2009, for example, AT&T's two-year-old VoIP-based U-Verse Digital Home Voice service surpassed the million-user threshold, the company said.)

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