Image source: AT&T
Earlier this week AT&T announced it will be spinning off WarnerMedia assets to Discovery. Going forward, that means AT&T will stick to its core services which means wireless, Internet and telecom for consumers and businesses. So, let’s pull the camera back and take a longer-term, historical perspective on what this means for the company, its investors, customers and workers — and for the larger industry.
I’ve been a wireless analyst, telecom analyst and pay TV analyst for the past three decades. I have watched major changes take place in all of these industries. Let me share some thoughts with you. And in the conclusion of this piece, let me explain the direction I believe this industry is heading.
First, this is the kind of larger-than-life move AT&T has always made.
If you recall, twenty years ago, the industry looked much different. There were separate sectors like local, long-distance, wireless, Internet, cable TV and more. Competitors in each stuck within their sector.
Then, tn the late 1990s, AT&T, the long-distance giant, acquired TCI or Telecommunications Inc and briefly became the largest cable TV competitor in the industry.
That honor was short lived, however, as AT&T struggled for years until it was acquired. It sold TCI to Comcast. That made Comcast the largest cable TV company in the country. That was when the cable TV industry was still in its heyday and still just pay TV.
Then around 2004, Baby Bell SBC acquired AT&T, BellSouth and Cingular. That suddenly transformed the smallest local phone company into one of the two largest players in the industry. Verizon was the other. It adopted the AT&T name and offered local and long-distance, wireless and Internet.
The next big growth wave was with the Apple iPhone and Google Android. Around fifteen years ago, they launched and sent handset leaders Nokia and Blackberry to the back of the list of competitors along with Motorola, who also had led and then failed a decade earlier.
iPhone, Android started next wireless data growth wave
That next growth wave was around wireless data. The industry went from a few hundred apps to millions over a few short years. Today, every company in every industry has its own app. Today, we use smartphones as the remote control for our lives.
So, as you can see, the industry has continued to grow year after year, decade after decade. The direction the growth has changed, however, and it’s up to executives to chart the course for the next growth wave.
AT&T, Verizon, Comcast expanded in different directions
That’s why a decade ago we started seeing wireless, telecom and Internet blend with pay TV. AT&T started offering Uverse, then it acquired DirecTV. Verizon started offering FiOS.
Comcast acquired NBC Universal, taking growth to an entirely new level.
That’s when AT&T started moving rapidly into pay TV. After DirecTV, it acquired Time Warner and changed the name to WarnerMedia. This gave the company not only pay TV to offer to viewers, but also content like Warner Brothers Studio, CNN and much more.
This sent Verizon on its own search for growth outside of traditional wireless, telecom and Internet, acquiring companies like AOL and Yahoo. The problem there was these companies were older and past their prime.
Other cable TV providers like Charter Spectrum and Altice have not expanded in the same directions.
Companies must stay on Growth Wave
On The Growth Wave, which I often discuss, AOL and Yahoo had already crested and were on the falling side.
All this was occurring as traditional pay TV and cable TV were starting to change. Today, traditional cable TV and pay TV is on the falling side of the growth wave.
Today, we see growth in Internet based TV or IPTV, streaming services like Disney+, HBOMax, Apple TV+, Peacock and so many others.
In recent years, a massive and sudden Change Wave is sweeping over both the television and entertainment industries and the pay TV and cable TV industries.
That being said, Comcast NBC Universal does seem to be on track. I had expected that the new AT&T WarnerMedia would be on the same success track.
Why Comcast NBC Universal seems to be successful
It seemed the grain at Comcast and NBC and Universal all ran the same way, however, so it was easier for them to work together.
That’s very different with AT&T, WarnerMedia, Warner Brothers Studio, CNN and others. Their grains across wireless, television and entertainment seem to be running in different directions, so it was more difficult to work together.
I think this is at least part of the reason AT&T is divesting itself of everything but its core services, at which is what it is still very successful. I am talking about wireless, Internet, telephone and such services.
Think back at how this sounds a little familiar to when AT&T acquired TCI in the late 1990s before ultimately selling it to Comcast. Sound a little familiar?
So, while cable TV seems to mix well with studios and television because they are all in the same business, it's apparently not the same as trying to blend wireless, telecom and Internet with pay TV.
More proof lies in how Verizon has recently sold off its AOL and Yahoo businesses.
AT&T, Verizon, T-Mobile focusing on core business growth
So, going forward, it looks like both AT&T and Verizon are getting back on track and focusing on their core services.
I expect AT&T, Verizon and T-Mobile to continue their strong performance and growth in wireless, Internet and telecom.
So, as big as this AT&T announcement was a few days ago, if we look ahead a few years, all this will be water under the bridge.
I think it is good news. It seems like all major players are getting back to their core strengths.
AT&T, Verizon, T-Mobile focused on 5G wireless growth
AT&T, Verizon and T-Mobile will focus on building out their 5G wireless opportunity for themselves, their customers, their investors and for other industries that will use the 5G opportunity to transform what they do. Industries like connected cars, telemedicine, smart cities and so much more.
So, moving forward, 5G is an enormous growth opportunity all by itself because it will power the next generation of services in numerous industries over the next decade.
Going forward, I expect these carriers will all focus on their core business opportunities. That being the case, growth in the wireless industry will be stronger, healthier than ever and much easier to understand.
Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/
Equities Columnist: Jeff Kagan
Source: Equities News