Mild-Mannered Canadian Fury

Doug Stephen is Politely Peeved

AT&T's Randall Stephenson Doesn't Get It

Sat, 05 May 2012 «permalink»

Brian X. Chen, for The New York Times Bits Blog:

When Randall Stephenson, AT&T’s chief executive, spoke about the state of the wireless industry at a conference this week, he shared some surprisingly frank comments about the iPhone. In particular, he said that he wished the company had never offered an unlimited data plan for the device and that he loses sleep over free texting services like Apple’s iMessage.


From Stephenson himself:

“My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat,”


“And it’s a variable cost model. Every additional megabyte you use in this network, I have to invest capital.”


“You lie awake at night worrying about what is that which will disrupt your business model,” he said. “Apple iMessage is a classic example. If you’re using iMessage, you’re not using one of our messaging services, right? That’s disruptive to our messaging revenue stream.”

It’s unhealthy, as a business owner, to not have concerns about your bottom line. That’s a given. You can’t give products away for no profit, or you won’t be a business. It may be even more unhealthy, however, to reject disruption instead of trying to be the innovator in your own space. If you succeed in your role as an innovator, then the fear of being disrupted goes away. What is painfully evident here is that Randall Stephensons’s primary concern when it comes to improving AT&T’s bottom line isn’t to drive growth and profit by offering the best possible experience for AT&T customers; his primary concern is to minimize cost and maximize profit from every one of his subscribers with almost no concern for offering compelling service, innovating in the telecom space, or basically being progressive, forward-thinking, or customer-driven in any sense.

Every single iota of service provided by wireless operators is effectively “data” travelling across their backbone. It’s all the same bits, and the fact that they have found a way to segregate the data by usage type and establish different prices for these different uses is a ridiculous farce. It’s long been known that SMS pricing holds a markup somewhere in the range of several thousand percent depending on your plan, but it’s all the same bits as your voice and your internet.

The fact that Randall Stephenson is more concerned about the fact that he is losing access to what is basically free money and the impact this will have on his business model instead of focusing on the user experience is indicative of a blight on the current operating practices of American wireless operators.

Dustin Curtis has a great take on Stephenson’s comments:

The future of wireless networks is very clear: they will be used for everything. AT&T Mobility and Verizon will very soon be providing your sole connections to the rest of the world, including your home internet, mobile internet, voice communications, television, and ambient devices. They are slowly transforming from phone companies into communications companies. The longer they try to hold on to stupid revenue streams like text messages and marketing monstrosities like “vCast”, the longer this transition will take.

He nails it here. Text messaging was on its way out long before iMessage, but AT&T has steadfastly held to its legacy business models and has tried its hardest to pigeonhole these new, Post-PC devices in to the slots held by old mobile phones. AT&T is failing in every regard to embrace its new role as a technology company instead of a traditional wireless operator and it shows in an ugly way when their high-ups make comments like this. What a depressingly narrow-minded way of thinking about the world.