AT&T mucks about with WarnerMedia some more

AT&T has finally got the US government off its back, but now the challenge of making a success of its mega-acquisition really begins.

Last week an appeal from the US Department of Justice to reverse the acquisition of Time Warner by AT&T, which completed in the middle of last year, was rejected and the DoJ decided not to appeal, so that seems to be the last of the US governmental opposition to it. Now we get to the small matter of absorbing a massive media company into an even bigger telecoms one and making a success of it.

Respecter of tradition as AT&T clearly is, the first step is a good old reorg. There’s nothing like hiring some fellow members of the CEOs golf club and drafting up a shiny new organogram to make you feel like you’re really getting somewhere and in that respect AT&T seems to have scored a hole in one.

The flagship appointment could also be viewed as a replacement since Richard Plepler, long time boss of arguably the most valuable component of the acquisition – HBO – decided to call it a day last week. It has been widely reported that this was the result of the kind of culture clash and competing visions that are typical of M&A, but it still feels like a major negative to lose someone with such rare experience of making and monetising premium content.

In retrospect the writing had been on the wall for a while. Last summer the AT&T lifer put in charge of WarnerMedia, indicated that he wanted to refocus on quantity of content, which usually means a reduced emphasis on quality. That’s not what HBO is about and all the talk in the world about big data and advertising won’t change that. HBO is a premium subscription model and AT&T would be unwise to think it knows better.

The person charged with reinventing the wheel is Robert Greenblatt, who was previously Chairman of NBC Entertainment. He will head up the entertainment and direct-to-consumer silos. Meanwhile Jeff Zucker is in charge of news and sports, which includes CNN, Kevin Tsujihara is in charge of kids content and Gerhard Zeiler is Chief Revenue Officer for WarnerMedia.

“We have done an amazing job establishing our brands as leaders in the hearts and minds of consumers,” said Stankey. “Adding Bob Greenblatt to the WarnerMedia family and expanding the leadership scope and responsibilities of Jeff, Kevin and Gerhard – who collectively have more than 80 years of global media experience and success – gives us the right management team to strategically position our leading portfolio of brands, world-class talent and rich library of intellectual property for future growth.”

“I’m honoured to be joining WarnerMedia during such an exciting time for the company and the industry as a whole, and I look forward to working alongside the many talented executives and team members across the company,” said Greenblatt, as convention demands. “WarnerMedia is home to some of the world’s most innovative, creative and successful brands and we’re in a unique position to foster even deeper connections with consumers. And it goes without saying I will always have a soft spot in my heart for HBO going back to the rewarding experience I had producing Alan Ball’s Six Feet Under.”

See? He’s all over this HBO shizzle. Thanks for everything Plepler, but I got this. To be fair Greenblatt he does seem to have pretty solid experience and is presumably a safe pair of hands, but if Stankey tells him to sacrifice quality for margin and the mass market he will presumably oblige. Telecoms is a very quantitative game and there is a real danger that AT&T will be culturally incapable of appreciating things that are harder to measure and for which the ROI is less immediate and demonstrable. If that turns out to be the case at least the former Time Warner people will be able to draw on their rich experience of failed M&A to help them.

Trump opposition to AT&T/Time Warner deal was personal revenge – report

Few would consider Donald Trump a conventional President but attempting to block AT&T’s acquisition of Time Warner to get revenge for poor coverage would be another level.

Trump’s distaste for CNN is widely known, though The New Yorker is now claiming the President’s opposition to AT&T’s acquisition of Time Warner was little more than a personal vendetta against the newsroom for poor coverage as opposed to an ideological protest against market consolidation. We’re not too sure whether to be surprised by such an accusation, such is the dramatic impact to the status quo Trump has had on politics.

It is claimed President Trump was attempting to pressure the Department of Justice into blocking the monstrous acquisition as revenge for the negative news coverage on Time Warner-owned CNN. According to The New Yorker, in a meeting with Trump’s former lawyer Michael Cohen and former Chief of Staff John Kelly, the President said:

“I’ve been telling Cohn to get this lawsuit filed and nothing’s happened. I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked.” Gary Cohn was, at the time, the Director of the National Economic Council – the main Presidential policy-making forum for economic matters.

The New Yorker then goes onto to claim Cohn resisted the push from the President, with aides suggesting he did not understand the ‘nuances’ of antitrust and competition law.  The Department of Justice did eventually file its complaints, though these were eventually overturned by a Federal Judge, with the DoJ then turning to the court of appeals.

It’s worth noting is that The New Yorker is not a friend of President Trump. Owned by Conde Nast, the editors are apparently given complete freedom from the parent company, with the publication having endorsed Barack Obama in 2012 and Hillary Clinton in the 2016 Presidential Election. The main topic of the New Yorker piece was an investigation into the relationship between right-leaning Fox News and President Trump.

While there certainly is a left-sided slant, it is also a highly respected title which has never failed a fact check according to the Media Bias/Fact Check website. This should not be considered as unusual as there are very few (if any) mainstream media titles in the US (or worldwide for that matter) which can honestly state they are impartial; there is always some sort of political bias.

What this does indicate is the growing, and not always positive, influence of politics of the TMT segments. Although politicians might have been slow off the mark in regard to the digital euphoria, they are certainly catching up quickly. Mass market communication has dramatically shifted away from traditional media in recent years, and the politicians are following the wake.

For AT&T, this is a headache which it will be happy to put in the past. Last week, a US Court of Appeals for the DC Circuit rejected an appeal from the Department of Justice challenging the Federal Judge which overturned its complaint against the acquisition. The DoJ claimed AT&T would have “both the incentive and the ability to raise its rivals’ costs and stifle growth of innovative, next-generation entrants”, though the Federal Judge and the appeals court dismissed the antitrust claims.

The number of lawsuits, counter-lawsuits and appeals has now created an incredibly complicated timeline, but there does not seem to be many routes of resistance left. Sooner or later, AT&T will be able to start figuring out how to recoup the $107 billion it decided to spend on Game of Thrones.

We’re cashing the IoT cheques now – AT&T

Some telcos are readying themselves for the IoT bonanza, but AT&T is cashing in on the connected dream today.

With 51 million ‘things’ connected to the network today, three million were added during the last period, AT&T’s Executive Director for Mobility Marketing Mobeen Khan boasts IoT is more than a commercial win for the telco, it is driving diversification.

“We have a deliberate strategy to go up the stack,” Khan stated at Mobile World Congress.

While traditionally telcos fortunes have been delivered through the network, Khan pointed to IoT as a means to diversify revenues, a long-sought desire from the industry. At the base level, AT&T can sell customers the hardware, moving up one level it can provide the connectivity, thirdly there are platform offerings, and finally, there are enterprise applications available to manage the business of IoT. AT&T is fulfilling the ambition of being more than a dumb pipe.

This is where it becomes more interesting to be involved in the IoT world. AT&T of course makes money off everything ‘thing’ which is connected to the network, but the massive potential is providing the platforms on the third layer. This is where Khan sees the IoT fortunes being delivered.

“Most companies already have the applications and software to make IoT work at a business level,” said Khan. “We don’t need to sell them these products, but we need to create the platforms which allow the data to be integrated into these applications.”

Take Salesforce as an example. Numerous companies around the world have already purchased licenses for this product, so there is little value in attempting to compete with a market leader which is a perfect foil for the business side of IoT. However, these applications are not designed to handles the vast swell of information generated through IoT. The pain point for many is filtering and actioning the useful information.

If a fridge is designed to work at 34 degrees, no-one needs to know if there are minor fluctuations each minute. If it rises to 34.2 or drops to 33.7 degrees, this is not insight. However, if the temperature spikes to 42 degrees, then you know there is a problem, this is data which can be actioned. This filtering process is the aspect of IoT which is complicated and time-consuming, not of interest to the application developers in the business, allowing AT&T to slide into the stack and provide value to the ecosystem.

Perhaps more importantly is the compounding effect. The simpler AT&T makes it for insight to be derived from data, the lower the barrier for entry for customers. Not only does this improve the potential for platform sales, but it also accelerates the number of ‘things’ connected to the network. There’s cash everywhere.

Some might be billing IoT as a justification for future 5G investments, but AT&T is getting a jump start on the market.

AT&T claims its customers love 5GE

In response to rival US operator Sprint suing it for deception over its 5G Evolution move, AT&T has insisted it’s just thinking of the punters.

“We understand why our competitors don’t like what we are doing, but our customers love it, opened the AT&T statement. “We introduced 5G Evolution more than two years ago, clearly defining it as an evolutionary step to standards-based 5G.  5G Evolution and the 5GE indicator simply let customers know when their device is in an area where speeds up to twice as fast as standard LTE are available.  That’s what 5G Evolution is, and we are delighted to deliver it to our customers.”

Hmm. It’s hard to argue with the assumption that phone users like to know what kind of network performance they can reasonably expect at a given time and location. If you see a little ‘E’ or even ‘H’ at the top of your phone then you probably shouldn’t expect a web page to load anytime soon and video streaming is definitely out of the question. Seeing ‘4G’ up there, however, says its smartphone data party time.

AT&T seems to want to indicate to its customers when they can expect bandwidth an order of magnitude greater than regular, vanilla 4G, which is fair enough, but the way it has gone about it does seem somewhat deceptive. Why not go for ‘4G+’ or (shudder) ‘4.5G’? The decision to package faster 4G as nearly 5G feels like a reach and it’s highly debatable how ‘clearly defined’ this designation is to its customers and the wider market.

“We will fight this lawsuit while continuing to deploy 5G Evolution in addition to standards-based mobile 5G,” continued the statement.  “Customers want and deserve to know when they are getting better speeds. Sprint will have to reconcile its arguments to the FCC that it cannot deploy a widespread 5G network without T-Mobile while simultaneously claiming in this suit to be launching ‘legitimate 5G technology imminently.’”

That last bit seems to be a veiled threat that persisting with this suit may complicate Sprint’s merger with T-Mobile US. How imminent Sprint’s launch of ‘legitimate’ 5G is seems incidental to the matter of whether or not AT&T has indulged in deliberately deceptive behavior, so this feel like a FUD move. If Sprint does win this case it could set an important consumer protection precedent so it’s worth keeping an eye on.

AT&T sued by Sprint over 5G BS

US operator Sprint is so outraged by AT&T’s attempt to rebrand its LTE-A service as 5Ge that it’s taking its competitor to court over it.

Sprint has filed a suit against AT&T in New York, as first reported by Engadget. You can see the full complaint at the bottom of that report but, as ever, it’s needlessly lengthy and legalese so here’s an attempt to summarise it in words of one syllable.

AT&T is accused of numerous acts of deliberate deception around its attempt to promote its LTE Advanced service as ‘5G Evolution’. There is the outright lie involved in suggesting something is 5G when it isn’t and then there’s the damage done to Sprint competitively and the outright damage done to the US telecoms market by deceiving it into thinking 5G is already here.

The complaint notes that ‘AT&T has yet to deliver a contiguous mobile 5G network or release a 5G-enabled mobile phone or tablet capable of connecting directly to a 5G network.’ And yet is went ahead with this 5Ge marketing campaign regardless, which Sprint says is ‘false and misleading’.

It was, in fact ‘a transparent attempt to influence consumers’  purchasing decisions by deceiving them into believing that AT&T’s network—because it claims to be a 5G wireless network—is more technologically advanced and of higher quality than those of other wireless service providers, including Sprint,’ alleges the complaint.

The three main material complaints are that:

  1. AT&T is engaged in false advertising
  2. AT&T is therefore deceiving the public
  3. AT&T is directly harming Sprint through this deception

So what does Sprint want the court to do about it? The hilarious legal jargon calls this the ‘prayer for relief’. Sprint wants AT&T to be prevented from using ‘5G’ in any of its ads until it’s proper 5G and it wants as much cash as possible in damages. Ultimately Sprint wants its complaint to result in a full-blown jury trial, which could get very interesting if it’s granted. There didn’t seem to have been any public response from AT&T at time of writing.

AT&T just misplaced 267k DirecTV Now subs, but it’s OK

The AT&T earnings call was somewhat of a mixed bag of results, with gains on mobile but it somewhat irresponsibly managed to misplace 267,000 DirecTV Now subscribers; its ok says CEO.

Digging down into the numbers always tends to lead to many twists and turns, but the big one is DirecTV Now, the telcos attempt to blend into differentiation and get ahead of the cord cutting generation. This has not exactly been a rip-roaring success for the business so far but losing 267,000 subscribers in three months is a headline which will take some beating.

So where did they go? According to the business, they were basically just allowed to leave. With $10 a month promotional subscriptions biting down hard on profitability, the powers-that-be seemingly decided to cut the losses. The company scaled back promotions and the number of customers on entry-level plans declined significantly, however on a more positive note, the number of premium subscriptions remained stable.

Unfortunately for AT&T, stable will not cut the grade anymore. Having made the questionable decision to acquire DirecTV for $67 billion in mid-2015, some would have hoped the outcome would be more than ‘stable’ three years later. With another whopper of an acquisition taking place during this three-year period, AT&T will be hoping to scale up success before too long if it is to reduce the debt weighing down the spreadsheets.

“Our top priority for 2018 and 2019 is reducing our debt and I couldn’t be more pleased with how we closed the year,” said CEO Randall Stephenson. “In 2018, we generated record free cash flow while investing at near-record levels.”

The other acquisition, WarnerMedia, seems to be having a better time of it than DirecTV. Total WarnerMedia revenues were $9.2 billion, up 5.9% year over year, primarily driven by higher Warner Bros revenues, consolidation of Otter Media and higher affiliate subscription revenues at Turner. What remains to be seen is whether this can continue. WarnerMedia is a media company which is awaiting the full integration and transformation wonders from AT&T. What impact this risk-adverse, lethargic and traditional business will have on the media giant is unknown in the long-run.

Elsewhere in the business, things were a little more positive. The team added 134,000 valuable post-paid subscriptions in the wireless business, though this remained below expectations, with the total now up to 153 million. Total revenues were up15.2% to $47.99 billion though this was also below analysts’ estimates of $48.5 billion. A bit more positive, than DirecTV’s car crash, but still not good enough according to Wall Street as share price declined 4.5%.

US operators belatedly act to protect user location data

AT&T and Verizon announced that they will terminate all remaining commercial agreements that involve sharing customer location data, following a report exposing the country’s mobile carriers’ failure to control data sharing flow.

Jim Greer, a spokesman for AT&T, said in a standard email to media: “Last year, we stopped most location aggregation services while maintaining some that protect our customers, such as roadside assistance and fraud prevention.” Referring to the Motherboard exposé, Greer continued, “In light of recent reports about the misuse of location services, we have decided to eliminate all location aggregation services — even those with clear consumer benefits.”

This is similar to the position T-Mobile’s CEO John Legere adopted when responding to the criticism from the US Senator Ron Wyden (D-Ore.). Verizon also announced that the company will sever four remaining contracts to share location data with roadside assistance services. After this Version will need to get customers’ explicit agreement to share their data with these third-party assistance companies. Sprint, which was also caught out by the Motherboard report, is the only remaining nation-wide carrier that has not announced its plan on the issue.

This is all good news for the American consumers who are concerned with the safety of their private data. On the other hand, mobile operators have hardly been the worst offenders when it comes to compromising the privacy and security of customer data. Earlier, Google was exposed to have continued tracking users’ location even after the feature had been switched off, while Facebook has been mired in endless privacy controversies.

Monetising user data is only a side and most likely insignificant “value-add” business for the mobile operators, because they live on the service fees subscrbers pay. But it is the internet heavyweights’ lifeline. This may sound fatalistic but it should not surprise anyone if the Facebooks and the Googles of the world come up with more innovative measures to finance the “free” services we have benn used to.

T-Mobile US bags another million, while AT&T makes doubles down on 5G claims

It’s been a busy day on the US side of the pond as T-Mobile US reported its full-year subscription figures, while AT&T promised a nationwide 5G rollout with few details.

Starting with the controversial and confrontational T-Mobile, the magenta army claims to have added total net customer additions of 2.4 million to the ranks over the last three months, while 2018 on the whole stood at 7 million total net adds. In the final quarter, the numbers stood at 1.4 million branded postpaid net additions, 1 million of which were branded postpaid phone net additions, making it the best quarter in four years.

“The T-Mobile team delivered our best customer results ever in Q4 2018 and we did it in a competitive climate while working hard to complete our merger with Sprint,” said John Legere, CEO of T-Mobile. “That’s 23 quarters in a row where more than 1 million customers have chosen T-Mobile – along with a postpaid phone churn result that’s below 1%. These customer results speak volumes about our company, our network and our brand.”

There is no question T-Mobile US has been a success story under the leadership of Legere, but the big question is how he has done it. In short, Legere has not conformed to the status quo, as you can probably pick up from his ranting and raving on social media, but hyper-targeted marketing has also played a role.

This is a strategy which has been in the making for some time now, the team promised to address markets and demographics which are apparently underserved, or blurred together with generic marketing campaigns. It seems to be the incremental increase approach to growth, but you can’t argue with success.

“…it’s the strategy we laid out for you, going back to 2015 and 2016 is in full effect now,” said COO Mike Sievert on the earnings call. “We said we were going to expand distribution, we did that. We said we were going to expand the segments that we go after and we did that. We were going to add a very serious focus on business, we did that. So, the results have the benefit of all those things in the runway now.

“So that’s a phenomenal uptick. Our suburban market share, we think is 14% to 15%. Our rural market share, we think is sub-10%. Military and older people, 55 plus, sorry Braxton. We think we have a 10%-ish share of both those segments that we’ve been focusing on for a year right now. So, lots of runway behind the strategy left to go, but you are starting to see, as we promised you would the effects of those investments now flowing through into our results.”

One segment which is in currently in the crosshair is enterprise customers. The team might have had one of the most successful quarters to date in this area, according to Sievert, but market share is very low currently. AT&T and Verizon naturally hold the lion’s share of the business, but T-Mobile US has already shown it is perfectly capable of making a challenge to the ‘duopoly’.

Looking ahead to the 5G bonanza, the T-Mobile team has decided to sit out the initial race, or how this has been spun by the PR ‘gurus’, instead focusing on the long-term nationwide charge.

“We are the only ones that have a plan to bring 5G nationwide in 2020,” said Sievert. “And the others are focused on millimetre wave in some places. We are bringing 5G everywhere we operate, and we are doing it by next year and that’s a real differentiator.”

In the pursuit of coverage and due diligence, Sievert is not being factually correct here, making a statement which is indeed inaccurate.

Looking over at the AT&T business, the team has made its own statement, perhaps an effort to redirect attention from the misleading statements it has made concerning ‘5Ge’. This marketing ploy is of course nothing more than an attempt to pray on the un-informed, using small print to its greatest effect, though whether the latest statement is any better we’ll leave you to decide.

Similar to T-Mobile US’ commitment to 5G, AT&T has now promised ‘nationwide mobile 5G footprint’ using sub-6 GHz spectrum by early 2020. The ambitions are certainly noteworthy from both parties, but what we are struggling to stomach at the moment are a lack of details; no-one has actually stepped forward to say what a nationwide rollout actually means.

Does this mean there will be a 5G footprint in every state? What percentage of the US will be covered by 5G? Will the rural communities have a taste of the new connectivity euphoria or will it simply be limited to the busiest sections of the largest cities? What transportation hubs will become a 5G hotspot? How many 5G cell sites are forecast for the time when nationwide 5G coverage will be claimed?

While we are being particularly critical of the claims, we believe this is necessary for an industry which is not always the most honest with its customers.

Although consumers should remain apathetic, though they probably won’t, to the 5G euphoria, or at least until there are 5G-specific services launched, the new networks will become a major marketing plug for the telcos. The marketing team need something new to talk about, and the ‘bigger, better, faster’ tendencies of these departments will ensure 5G is front-page news.

All of the 5G buzz means very little to the consumer right now, but don’t tell them that. However, on a more positive note, it is quite exciting at how quickly the 5G promise is becoming a reality.

AT&T’s 5G false start backfires

The attempt by US operator AT&T to rebrand LTE-A as 5Ge has quite rightly left it open to ridicule.

It was never in any doubt that a US operator would jump the gun regarding 5G this year, it was just a matter of who. The geniuses in AT&T’s marketing department decided it should be them and, while the rest of us were opening Christmas presents and falling asleep in front of Bond films, they were plotting how to claim 5G victory without actually serving up any 5G.

Inspired, perhaps, by the best wireless technology currently available on the AT&T network, their hours of brainstorming yielded the word ‘evolution’. If you stick a little ‘e’ after 5G, they apparently reasoned, then you’re basically saying it’s nearly 5G. Closer to 5G, in fact, than 4G, so putting 5G on phones is totally justified. Essentially AT&T is saying it has the most evolved AT&T.

Not only has the entirety of the telecoms and tech press been merciless in calling bullshit on this risible move, but AT&T’s main competitors have wasted little time in taking the piss. Verizon CTO Kyle Malady was moved to publish an opportunistic piece entitled ‘When we say “5G,” we mean 5G’.

“We’re calling on the broad wireless industry to commit to labelling something 5G only if new device hardware is connecting to the network using new radio technology to deliver new capabilities,” he said. “Verizon is making this commitment today: We won’t take an old phone and just change the software to turn the 4 in the status bar into a 5. We will not call our 4G network a 5G network if customers don’t experience a performance or capability upgrade that only 5G can deliver.”

As you might expect, T-Mobile US was much less restrained in its response. CEO John Legere collated some of the media dismissals of the move and shared them on Twitter. His marketing department warmed to the theme and posted a video of someone putting ‘9G’ sticker over the top of the network notification display in the top right of an iPhone, to ridicule the cosmetic nature of this AT&T initiative.

The sad thing is that this probably won’t harm AT&T. Yes it looks ridiculous now, but if there’s no such thing as bad publicity then AT&T seems to be getting a fair bit of it. That could change, however, if this move becomes a ‘quirky’ at the end of mainstream news bulletins, and AT&T becomes synonymous with marketing incompetence and duplicity, then that old axiom will be put to the test.

AT&T rebrands LTE-A as 5Ge

AT&T customers might have noticed a new symbol appearing in the top corner of their devices and for those who aren’t paying attention, they might be duped into thinking the telco is offering 5G connectivity.

AT&T has now switched on its ‘5G Evolution’ service meaning a ‘5Ge’ symbol will appear in the corner of Samsung Galaxy S8 Active, LG V30, and LG V40 devices. For everyone else in the world, ‘5G Evolution’ is 4G LTE-Advanced, though AT&T feels the need to intentionally try to mislead customers, fooling them into believing they are receiving 5G data services.

Why AT&T feels it is appropriate to deceive its customers so blatantly is beyond us.

AT&T might well be one of the first to offer 5G services through a portable hotspot device, albeit in a very limited area, but compatible smartphones are still months away. There will of course be various different leaks and promotions over the next couple of weeks leading up to MWC, but the first devices able to make use of the 5G euphoria will not be available until Spring at the very earliest.

With this in mind, AT&T is simply taking advantage of customers who do not know any better.

While this might seem like an underhanded and putrid act from the telco, it’s all about the marketing war which is about to kick off in the US. Verizon can claim to have broken its 5G duck first with the launch of a fixed-wireless access solution, but AT&T has the bragging rights for the first 5G mobile device. This ‘5G Evolution’ deception from AT&T is just another move in the battle for the consumer’s attention.

What is worth noting is that the portion of AT&T’s network offering ‘5Ge’ or LTE-A to call it by its proper name, has received a speed boost. The telco claims speeds of 400 Mbps could be achieved with the connection, though who knows whether this is actually true. AT&T isn’t making itself out to be the most honest brand around here, and perhaps we should start questions the legitimacy of any claim the telco makes.

The long and short of it is AT&T is intentionally, directly and disgustingly misleading its customers, a move that could well blow back in its face.