Its AT&T's World. We only Live in it.

One of the best ways to gather information about the tendencies of large media companies is through listservs. Basically, a listserv is a running e-mail dialogue among groups of people who have similar interests in obtaining and sharing information, venting about government or corporate policies, and testing strategies they might use in the future. Here’s an illustration of how information on a listserv might be useful.

The following was a recent piece of intell I came across (the name of the city has been changed to protect the innocent):

“AT&T rolled out their U-Verse product in “Chilldale” in March 2007. They deployed close to 18 nodes in the initial go-around, plus an additional 15 or so in the second round. About 60% of “Chilldale” will be covered with service in these 2 rounds of construction.” (Definition of a NODE: a transmission point on a telecommunication grid, the physical plant of fiber optic lines and other electronics, from which a specific number of households are “fed” access to the internet and other services that telephone or cable companies provide.)

What does this information tell us? First, in “Chilldale” AT&T is rolling out “U-Verse”, its bundled media package, consisting of digital television, broadband access, VoIP telephone, and cellular\wireless services. These products are offered over a newly built fiber optic digital backbone, which AT&T calls “Project Lightspeed”. They will install 33 nodes over 60% of Chilldale, which means, presumably, that by the final phase of construction the entire city will be covered by 55 nodes.

Industry policy used to dictate that each node served up to 1000 households (2.4 people per household), or 2400 people a node. However, Chilldale’s population is only 29,000, so each AT&T node will serve about 527 households. (Fewer households per node means faster internet speeds, and more business conducted.) This is an improvement over cable, and suggests that AT&T is building in extra capacity for future services.

Based on these facts, we can extrapolate the following:

1) Given the manner in which AT&T traditionally develops business policy, we can be pretty sure that this technical deployment of infrastructure is company-wide, at least on the West Coast. Moreover, it may be similar (but not exactly) to deployments by Verizon (which is rolling out “FIOS”). Reports on the node capacities of Time Warner (which offers services under the “Roadrunner “ brand), and Comcast (which calls its services: “High Speed Internet”) suggest that both companies are also reducing the numbers of households served per node to stay competitive.

2) Due to a recent change in California Telecomm law (AB 2987), however, the state’s Public Utilities Commission limits competition by AT&T and other “telephone” companies with cable TV operators, such as Time Warner, in specific geographic areas. So for example, AT&T and Verizon do not compete and have been given separate service areas, and would only compete with Time Warner or Comcast (which are also geographically separate) in California. AT&T also competes for digital television subscribers with Direct TV and Dish Network, but not significantly over internet or telephone services, at least not yet.

3) Based on this competitive landscape, which we will return to in a moment, we know that content providers on each system, including commercial television, PBS, educational, web, or PEG access channels), are distributed in different ways. For example, commercial broadcast channels owned or affiliated with CBS, NBC, ABC, and Fox are the most widely distributed across TV, Internet, Telephone, and cell\wireless (via downloads), while on the other end of the scale, non-commercial Public, Educational, and Government access programs are the distributed only on local or regional cable channels. (The exception is those which operate their own web channels, but these are truly few and far between.)The general rule is: the wider the distribution the better the audience, a decision resting solely in this example with AT&T. There are other variations, such as PBS channels and Educational channels which are either affiliated with PBS or are independent. For those channels, the advantage remains being lumped with the mass audience commercial stations, at least for the time being.

4) Another feature of AT&T’s media services rollout is the way it is done: most often in phases, and almost always first in the most affluent and “high market” areas of a city or region. Again, under California’s new telecomm law media companies are encouraged, but not required, to provide universal service when certain benchmarks have been reached. (AT&T was given two waiver mechanisms, including one 2 years after it has reached only 30% penetration.) That means that there will be large areas of cities that will not have competing media services: TV, Internet, Telephone, Cell\Wireless (telephone company vs. cable company). Most of these areas will continue to be served by the incumbent cable operator, whose service record was the initial spur that pushed the new telecomm law in the first place. But this also means that in the short term savvy organizations, particularly those with the widest distribution across several media platforms, can reach more people with their channels and do a better job of providing information, at least in theory, than other channels with narrower distribution.

5) Despite AT&T’s reputation for dominance, the company remains in a competitive struggle with Time Warner, Comcast, and other cable operators for subscribers. This competition, which could be short lived if mergers occur, provides opportunities for partnerships, which if based on competitive advantages, can be promoted for the benefit of all parties. As long as competition exists for media services, for example, the opportunity will exist for educational organizations to appeal to the community spirit and good feelings of different companies for sponsorships and other benefits.

6) On the other hand, based on what we know about AT&T’s long history as a telecomm company, it may not be the best choice for a partner, particularly if a partnering organization is hoping to exploit visual media (digital TV or streamed video over the web). Unless there has been a cultural revolution within the company, and there are signs that such a change is occuring, decision making at AT&T has usually been centralized and mostly “top-down” in the old Ma Bell style. These are, after all, telephone people, who are converts to the digital age, and like many converts AT&T seems hell bent on convincing everyone with saintly zeal that this is a new company with different ways of doing things. This, of course, remains to be seen, and should be noted as a positive development, but by no means should justify exclusive agreements without first seeing what the competition has to offer.

7) Finally, the modest bit of intelligence we gleaned about AT&T also suggests that the media landscape in American cities is changing rapidly and should be monitored, and probably mapped, to determine where and how best to strategically position your organization. In other words, if AT&T is rolling out 55 nodes in “Chilldale”, where are Time Warner or Comcast’s nodes, and when will competition for subscribers actually begin ? We could also overlay Direct TV and Dish Network on the landscape in anticipation of their rising market shares. Within this map it is also important to locate the existence of programming channels carried, or absent, on each system, as well as the location of Wi-Fi hotspots provided by AT&T, Verizon, T-Mobile and Sprint, which are now widely available in most areas. Such a map, which should be updated periodically, is the only way to keep track of the players and the services they provide in any particular section of the country.

As you can see, the context in which companies like AT&T, Verizon, Time Warner, Comcast, Direct TV and others operate is wide, and in many ways creates ripples in different arenas. These ripples, however, can be “ridden” or exploited by organizations that have a clear vision of their own agendas. That vision requires information and an interpretation based on particular circumstances. Only then can opportunities be identified and effective strategies developed.

Copyright © 2007 R.E. Xavier