Author(s): Raghu Gopal
AT&T and Verizon are two large wireless carriers with a common ancestor, but each is evolving in different ways.
On Tuesday, both carriers announced their financial results for the second quarter of 2018. For AT&T, the results offered an indication of what the company looks like with Time Warner's assets under its umbrella. For Verizon, the disclosure provided some insights into how the business will behave under its incoming CEO, Hans Vestberg.
AT&T's acquisition of Time Warner closed on 14 June 2018, but the deal had been in the works since late 2016. The mobile carrier's senior leadership had time to contemplate the service packages it would offer after adding content brands such as Turner Broadcasting System, CNN, A&E, HBO, TCM and Warner Brothers. AT&T was quick to launch a streaming bundle called WatchTV, which gives access to 30 live TV channels and 15,000 titles on demand.
AT&T also quickly introduced two tiers of unlimited wireless data packages called Unlimited &More and Unlimited &More Premium. The services provide subscribers with unlimited voice calls, text messages and data, along with access to the same premium video content available through the carrier's WatchTV plan. The difference between the two wireless packages is the quality of the video streams.
With eyes on launching 5G services, AT&T is focusing on creating complete bundles, providing fixed-line and wireless connectivity together with quality content. The company has been eager to work its way across the value chain, from infrastructure to broadcasting and down to advertising.
While AT&T has broadened its portfolio, Verizon appears ready to concentrate on its wireless network, particularly the build-out of 5G. This was highlighted by the appointment of Hans Vestberg as the successor to Verizon's outgoing CEO, Lowell McAdam. Mr Vestberg previously led Ericsson, and joined Verizon in 2017 as its executive vice president of networks. He knows the wireless infrastructure business and has been an eager proponent of 5G connectivity.
With the original recruitment of Mr Vestberg, Verizon's leadership team made it clear that it aims to be the heart of the so-called 5G economy in the US, laying the foundation from the fibre backhaul to the last mile of mobility. As the company implied, it doesn't want to be distracted by the acquisition and integration of a major content provider, appearing ready to partner rather than own for Internet-based services.
AT&T and Verizon now have two very distinct strategies, and to be fair, there's not necessarily a right and wrong approach. Each is turning to its talents and subscribers to gain an advantage. Both are taking different types of risk: AT&T could lose its focus as it incorporates another major US company and working through new debt; Verizon risks marinating itself in 5G euphoria despite questions about timing and business models surrounding the new generation of wireless technology.
Other carriers around the world are looking to make a similar decision of either specialising in the pipes of future networks or gathering more assets to broaden their product portfolios. The US market is providing some specimens for others to follow.