AT&T $14 Billion VIP Project Expands LTE, Business Services
AT&T CEO Randall Stephenson opened the event by acknowledging Hurricane Sandy, which paralyzed much of the New York region the week before. "We compete and go hard at each other every single day," he said of the wireless industry, "but in a moment of crisis, I'm really pleased how we all worked together toward one end, and that was to get our communities communicating and do it quickly. ... We put the public first." After the storm, AT&T and T-Mobile allowed customers to roam across both networks, helping supplement each other's damaged networks.
Key Revenue Drivers
AT&T's key revenue drivers are mobile data—which brings in $26.6 billion a year—its U-verse offering of TV and broadband, and business services such as VPN and Ethernet. Increasingly, AT&T expects cloud and security services to contribute to its business-based revenue, and Project VIP will help make it possible.
One goal of Project VIP is to cover 99 percent of AT&T's customer locations with 4G LTE. Over the last year, AT&T has acquired spectrum through more than 40 deals, much of it for WCS, or Wireless Communications Service—a type of spectrum that the carriers had considered largely unusable but that AT&T, with the approval of the Federal Communications Commission, has figured out how to use for future LTE deployments.
The Tablets Are Coming
Driving the need for more spectrum and more data support are tablets. "Smartphone sales now exceed PC sales, and it's not going to be long before we see tablets doing the same thing," said Stephenson. Ralph de la Vega, CEO of AT&T Mobility, put it another way. "It's going to be raining tablets," he said, which will offer AT&T a "tremendous growth opportunity" to monetize that data.
The Connected Car
One anticipated new growth area for AT&T will be the connected car. AT&T expects the car will soon act as a personal assistant of sorts, updating a person on the day's calendar, checking traffic ahead and even making sure he hasn't forgotten his phone.
AT&T, in a video, showed off not just a connected car but how AT&T's services will complement each other. When the kids got into the backseat, the car acknowledged the phones in their backpacks. After the mom video-called to say she was running late, the father used voice commands to order a pizza for delivery.
In 2013, AT&T will launch an all IP-based home security and automation service. In this photo, the car communicates to the house that it's home and to turn on the appropriate lights and readjust the thermostat. According to de la Vega, 80 percent of the country doesn't have a home security system because there's a lack of affordable options. "I see a huge growth opportunity, on top of huge data growth," he said.
Another new initiative to be helped by Project VIP is Isis, the mobile-payment solution based on near-field communication (NFC) that AT&T is rolling out with Verizon Wireless and T-Mobile. According to Strategy Analytics, there will be more than 40 million NFC-enabled, SIM-based smartphones in the United States by the end of 2013.
Pilot Programs for Isis Take Off
Pilot programs for Isis are now being conducted in Salt Lake City and in Austin, Texas. Isis is free for consumers to use, but AT&T earns revenue by allowing it on its phones and enabling advertisers to reach customers. "The mobile payments opportunity is huge," said de la Vega.
Cooperating in a crisis is one thing, beating the competition day-to-day is another. AT&T has a three-pronged strategy for driving growth: maximizing its core strengths, differentiating itself with various platforms and delivering integrated solutions. "We believe this three-pronged strategy will result in new billion-dollar businesses," said Andy Geisse, AT&T's CEO of Business Solutions.