AT&T’s CEO says it is focused on being balanced in the business services ecosystem

May 23, 2024
The service provider continues to look for ways to serve better medium and small businesses, which it traditionally ignored in favor of large business customers.

AT&T, like other large traditional telcos with expansive domestic and international network assets, has enjoyed long success in serving large business customers. Still, that focus has come at the price of insufficient focus on medium and small business customers. 

With much of AT&T’s emphasis on large multi-national business customers, it has given an entrée to cable competitors to gain market share as an alternative source that has been able to leverage their sizeable hybrid fiber coax (HFC) and increasingly growing fiber networks to serve the segment.

But AT&T is taking steps to rectify this situation.

Speaking to investors during the 52nd Annual J.P. Morgan Global Technology, Media, and Communications Conference, John Stankey, CEO of AT&T, said the company is developing new products and offerings tailored to the unique needs of medium—and small-business customers.

“In the mid-market and the small segment, I don't think we're getting our fair share, which indicates our wireline problem,” he said. “Our distribution over the last decade-or-so probably wasn't as well tuned to those segments. Our product offers and how we thought about those segments weren't as well-tuned as needed. And then certainly, our converged offerings aren't as well structured as needed.” 

He said the company's lack of focus on the medium and small business market was related to its momentum in the large business segment, adding that it is making progress.

“As many businesses can do, you go to the path of least resistance for your success,” Stankey said. “And if you're doing reasonably well in a segment, you ignore the other. The management team is much more focused on being more balanced in today's business ecosystem. Building that muscle in the mid and low part of the market is hard. We've been at it, in earnest, probably for about three years.”

Fixed wireless resonates

AT&T is finding that wireless services are taking more excellent hold with businesses.  In the business segment, wireless service revenues grew by 4.6% in the first quarter, outpacing the overall growth of mobility services revenue.

Also, New services like AT&T Internet Air for Business, its fixed wireless service, are resonating with the small and medium business segment.

In particular, the Internet Air service could be a good fit for remote businesses that can’t get fiber or business sites that don’t have ample bandwidth requirements.

“Internet Air allows us to have a more ubiquitous message now about what we do in that segment that we didn't have before, which I think will help our wireless business, our handset business, and our data connectivity business,” Stankey said.

Balancing growth, legacy

One of AT&T’s ongoing challenges in the business segment is its ability to balance growth services and the drain of customers migrating from once-lucrative legacy TDM-based voice and data services.  

The drag of legacy declines has continued to affect its Business Wireline results, a trend that continued into the first quarter.  

Business Wireline revenues declined 7.8% yearly to $4.9 billion due to lower demand for legacy voice and data services and product simplification. This was partially offset by growth in connectivity services and non-recurring equipment revenues.

To combat these challenges and get itself onto growth over time, Stankey said that AT&T is enhancing its internal information systems and pursuing new distribution partners. However, this process requires what he says is “a little bit of time.”

“Our job is to continue to balance that growth in the new areas with pulling costs out of the old,” he said. “The good news is we've been very successful in business. The bad news is that we have a bigger base of products that people must migrate to. And that's a good problem and bad problem, but we know how to operate and manage it, and we'll continue to do that as we go forward.” 

For related articles, visit the Business Topic Center.
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About the Author

Sean Buckley

Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.

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