Bullet Point Analysis: AT&T Domestic International Messaging & Calling Move - Responding to Verizon Wireless & T-Mobile

WHAT IS IT?

AT&T announced it is proactively baking in unlimited international messaging (text and picture) from the US to the 'world' for its Mobile Share and Mobile Share Value customers. The feature will be available on Friday, February 28th.

AT&T is also introducing a new international calling package called World Connect Value where a customer can call 'over' 35 countries from the U.S. for one cent per minute. This package is priced at $5 per month.   

ANALYSIS

Just like that, AT&T's single move addresses vulnerabilities brought about by competitors' moves last week and the week before.

• AT&T's quick move comes at the heels of Verizon Wireless' new More Everything plan adjustment on February 14th and T-Mobile's new Stateside International Talk and Text plan options ($10/$15) on February 20th.

• Domestic based international benefits are becoming table stakes in the subscriber retention/acquisition war. Though it overtly benefits consumers with friends and family abroad, other beneficiaries are business/enterprise users who choose to use their smartphones for immediate international contact instead of standard email and landlines.

• All mobile carriers' unlimited stateside international messaging fights, to some extent, the free OTT applications that perform voice and messaging including, WhatsApp, Skype and Tango.  

• AT&T Mobile Share & Mobile Share Value plans are now at stateside international messaging parity against Verizon Wireless' More Everything plans. However, it is still at a $5 pricing disadvantage at the 1 & 2 GB options when looking for Verizon Wireless switchers. Additionally, if it looks for further plan parity, it is missing 500 MB and 3 GB options.  

• The international calling changes the playing field against T-Mobile. T-Mobile's plan is looking for a $15 price point that provides unlimited mobile-to-mobile calling to 30 countries, unlimited landline calling to 70 countries coupled with unlimited text messages. AT&T offers a lower $5 price with 1 cent/minute to mobile and landlines in 35 countries. Clearly it's difficult to do an apples-to-apples comparison and the benefits are user dependent. 

• AT&T's World Connect Value plan meets the same $5 price point as Verizon Wireless' International Long Distance Value plan though Verizon claims 230 destinations.  Note that destinations as a code word may not include country.   

 COMPETITIVE IMPACT?

• Verizon Wireless really doesn't need to do anything as AT&T is just reaching international messaging parity against the More Everything plans. One possible decision is whether to proactively give its Share Everything subscribers this feature or just move them to the new More Everything plans without fees.

• T-Mobile just made a move and competitors' responses don't really undercut it. This may or may not be an issue as it tries to acquire multinational business customers.

• Sprint already has a $15 International Freedom Call and Text.  It now needs to decide whether meet larger competitors' $5 price point and include unlimited messaging as part of its domestic plan structure or stay the course to be on par with T-Mobile.  

• These Tier 1 carrier moves are at a brisk pace that may impinge on regional carriers, chiefly US Cellular. Can they keep up?

Unlike the old days where it took a month or more to react to competitive vulnerabilities, large carriers have shown that it can react rather quickly. In this case, AT&T did it in about 11 days.  But AT&T still seems to be mulling over the 500 MB, 1, 2 and 3 GB options, whether to match its long standing rival or let it ride for a while. Let's see what happens.  

Tier One Carriers' Chief Marketing Officers - New Player at Sprint

This is an update of a new CMO at Sprint.  You can find the old posting listing other Tier 1 Carriers' CMOs here.

Sprint is a company in transition and catch up mode. After Softbank's completed its purchase of Sprint in July 2013, the inevitable organization shake up was to be expected.  In September,  Advertising Age reported that Bill Malloy was going to step down as Chief Marketing Officer. 

Sure enough, in early October the new executive landscape was somewhat disclosed. Yet the new Chief Marketing Officer had yet to be announced.  Of course there is some internal etiquette in deference to the incumbent but as of January, Sprint has been in a low visibility CMO transition.  Still, industry watchers could have seen this back in January within the texts of Sprint's Framily plan launch and this month's Framily plan announcement for small businesses. 

Sprint's new Chief Marketing Officer is Jeff Hallock and it's likely that a formal announcement will come about soon once Bill Malloy exits in March.  <Note - this is what should happen in light of the many questions on investor calls on how Sprint marketing will breakout its differentiation.  One would think a new CMO (similar to Mike Sievert at T-Mobile) will articulate his and the company's marketing strategy.>

Mr. Hallock is a Sprint veteran with at least 15 years in product marketing and channels. His latest two year tenure with media and advertising positioning rounds him out for overall CMO credentials.  Education: BS at Wake Forest and MBA at UNC-Chapel Hill.

Jeff Hallock in 2005 touting Sprint Music - Picture from CNET

Given owner Softbank is very aggressive in Japan, it'll be interesting to see what develops from Sprint under Mr. Hallock's tenure. 

Bullet Point Analysis: Verizon Wireless' More Everything Plans

WHAT IS IT?

Verizon Wireless modified their postpaid rate plans. There are 4 key elements of the announcement.  

1) More Everything plans are the new face of postpaid plans. The old plans (likely still in the system) were named Share Everything plans.  Below are the new data thresholds  and associated price points.

2) Unlimited international messaging to complement unlimited domestic messaging will be included in these More Everything plans.

3) Each More Everything plan line receives 25 GB of cloud storage (a.k.a. Verizon Cloud), an upgrade from the norm of 5GB, which also happens to be the standard offerings from AT&T and Sprint. 

4) High-value Verizon Edge customers will get a break on per smartphone "access" pricing, $10/month off monthly smartphone access for data allowances up to 8 GB, and $20 off monthly smartphone access on plans of 10 GB and higher. 

ANALYSIS

There are plenty of media analysis looking at the consumer, and I won't replicate that.  The takeaway for this new action is that it's focused on AT&T.  Verizon Wireless and AT&T have long been each other's primary competitor as both companies position themselves as premium carriers.

Verizon Wireless' More Everything move follows a series of back and forths in industry rate plan adjustments.  Many can argue T-Mobile's UnCarrier 1.0, 2.0, 3.0 started it all off in 2013.  However, AT&T's Mobile Share Value plans launched on December 5, 2013 help start the ball rolling with Verizon Wireless. AT&T's and T-Mobile's (UnCarrier 4.0) Paid switching programs joined by Sprint's January Framily plan announcement also added to the competitive atmosphere.   Though there was a minor Verizon adjustment in January, that was to help to upgrade their featurephone base.  However, things got a bit more complicated at the beginning of February when AT&T announced $15 per smartphone line for non-2 year {Next or customer supplied) Mobile Share Value plans with 10 GB or greater thresholds.     

• Looking at More Everything side by side against Mobile Share Value plans, Verizon Wireless  did a quick turnaround on their 250 MB plan by dropping the price $5 less than a month after introduction.  It also provides some logic to double the price point to get to the next data level (250 MB/$15 --> 500 MB/$30).   

Aside from the new plans under $60, Verizon Wireless didn't touch the rest of the portfolio. Verizon now opens the battleground on lower data thresholds with 5 options below $70 compared to AT&T's 3 choices.  At the same data levels of 1 & 2 GB, Verizon Wireless turned a pricing disadvantage to one that beats AT&T by $5/month.    

• Unlimited international messaging is a feature coup.  Whether consumers do or do not have international contacts, a lot of marketing mileage can be drawn from this feature.  The segment to possibly benefit in this feature are the business/enterprise customers who are more likely to have international contacts.  This also helps somewhat to negate some OTT lock but it'll take time to wean users off free OTT (e.g., WhatsApp, Viber, Tango, Sykpe, etc.) services.

• With 25 GB included storage, Verizon Wireless clearly bests competitors' 5 GB but does it matter?  

• Next and Edge monthly smartphone "access" pricing.  AT&T Next customers were paying $25/smartphone for any data plan below 10 GB, otherwise they would be at $15/smartphone. Verizon's move doesn't match Next pricing. For 8 GB and below, Edge customers pay $30/smartphone whereas 10 GB or higher plan customers pay $20/smartphone.  Regular two year contract (subsidized device) pricing remains at $40/smartphone for both carriers.

COMPETITIVE IMPACT?

• AT&T is now at a disadvantage and needs to respond. Matching price at 1 and 2 GB is the logical route. Whether they match with a new 3GB tier and the $60 price point is up in the air and something they have to analyze their customers' data consumption habits at the 2 and 4 GB tiers.  
• Unlimited and free international messaging is serious and all carriers business/enterprise accounts are now potentially vulnerable and at a disadvantage.  This feature provides Verizon Wireless enterprise reps some differentiating factor to tout.  The playing field may be changed, however, with in-country unlimited messaging if a business plan can be justified.  
• Competitors with baked-in cloud storage may not have to take any rash decisions as consumers have abundant OTT options (e.g., Google Drive, Microsoft OneDrive, Apple iCloud, Amazon Cloud, Dropbox, etc.) at their disposal.    The unifying challenge for carriers is to make their own carrier cloud storage relevant.
• Since Edge isn't as high of a priority for Verizon (AT&T in comparison is more aggressive with Next) the new smartphone price points help the existing base but price-wise won't do anything to help switch AT&T Next customers.   

Timing wise, we're midway through 1Q14. The ink is still a bit wet on AT&T's early December Mobile Share Value plans but we've seen these monolithic corporations become quite nimble in providing rapid competitive responses.  The stakes are too high these days.

Want to talk about this and other carrier moves more? Contact me at william.ho (at) 556ventures.com.