Here's How AT&T's Enhanced Unlimited Plans Are Competitive

Well, it's the first quarter and carrier(s) historically have restructured its rate plans in order to remain competitive or gain the upper hand.  Restructuring is different than running short term promotions to goose up the quarter's number. T-Mobile and Sprint are already doing that. For this first quarter, we find AT&T 'enhancing' their two rate plans, formerly known as Unlimited Choice and Unlimited Plus. Now, the company adds the Enhanced moniker to lengthen the product names.  The announcement was buried in a press release about regional promotion offers and the new rate plans began life on March 1.

The changes in a nutshell:

Unlimited Plus Enhanced (pricing includes $10/month autopay/eBill credit): 1 Line – $80; 2 Lines – $150; 3 Lines – $170; 4 Lines – $190; 5-10 Lines – $30/line.

Each line includes up to 15GB/month tethering. Each account includes free HBO for life regardless of whether customer subscribes to an AT&T video service and a $15/month video credit for DIRECTV or DIRECTV NOW. 

Unlimited Choice Enhanced (pricing includes $10/month autopay/eBill credit):  4 lines for $160/month: 1 Line – $65; 2 Lines – $120; 3 Lines – $140; 4 Lines – $160; 5-10 Lines – $30/line.

Full 4G LTE speeds (vs. 3Mbps previous). Each account includes free HBO for life regardless of whether customer subscribes to an AT&T video service and a $15/month video credit for DIRECTV NOW.

Looking at the new versus the old:

• the additional line rate went up 
• the first/single line went down 
• more GB for tethering 10 -> 15 GB
• no more throttled at 3Gbps (DL) for Choice subs
• $15 video credit - DTV or DTVNow

Clearly, there are pros and cons. Some may view increased cost, some may view the changes gives more choice and features. Others will see that it's changing the tables (but continuing the strategy) for bundling wireless service and video.  It's all those things depending on one's own perspective. But the true test will be how competitive the 'enhanced' move is against other carriers, and which ones?  Let's face it, creating and refining rate plans isn't a simple task (hat tip to all price planners) but the final product needs to be an effective Swiss Army knife.  What's the holistic view and how do the Enhanced plans stack up?

 Those who long follow carrier competition, you know that typically the big two's rate plan moves are usually against each other.  Yet, in today's environment, T-Mobile's multi-year momentum needs to be addressed.  (Way back machine: In the late 2000s, AT&T went toe-to-toe against T-Mobile's value pricing. In an earnings call, then CFO Pete Richter said that it was a mistake and AT&T wasn't going to do it anymore.)  That was then, this is now.

AT&T introduced Unlimited Choice to address potential and existing customers' price sensitivity and wanted the AT&T network (the same is true for Verizon's gounlimited plan). As the chart above shows, Choice Enhanced beats T-Mobile One on single line but stays in line up to line 4 (all non-promotional pricing).  Moreover, the new Choice Enhanced pricing beats that of Verizon's gounlimited.  The same holds true for Plus Enhanced against Verizon's beyondunlimited.  Both restructured plans provide a nice $10+ price gap against its Verizon counterpart.

Moving forward, can T-Mobile stand losing out to price against AT&T? Maybe, as Magenta will argue that its real competitor is AT&T's Plus Enhanced plan which it beats. Sprint for its part remains the price leader and with its promotions, it just needs to acquire new subs.  Yet Verizon is in a quandary as this AT&T price move not only affects consumers but the more lucrative enterprise and other business segments.  First in my mind is FirstNet.  While AT&T is the lone FirstNet provider, it needs to bring the public safety entities into the FirstNet fold. What better tool than this more advantageous rate plan to help shift first responder accounts from Verizon onto AT&T?

It's the third month of the first quarter.  How vulnerable are Verizon Wireless consumers and business customers to this change? The rate plan is only a week old but I suspect that AT&T on the feet sales folks have been talking the price savings up in business and potential FirstNet accounts. The question is will Verizon react this month or the next? The price gap is decent.  Tempus fugit. 

  

DIRECTVNOW PRESS LAUNCH - 11/28/16 + GROWTH

On Monday, November 28, AT&T launched DIRECTV Now to the press and media.  DIRECTV Now represents a huge growth component for AT&T. While many people look at the details of price, number of channels, and UI/UX, all these will continually be refined as the company markets its existence. The key point here is that the foundation was the DIRECTV (DTV) acquisition that enabled AT&T to springboard beyond its flattening wireless growth and its declining wireline and satellite business units.

Also key to the DIRECTV Now success is leveraging and further exploiting all the legacy DTV content relationships. If one follows the PR content announcements, it's easy to see why there had been a flurry of activity to locking in those content partners as the lynchpin for DIRECTV Now's mainstream premium content messaging. It's also why the Time Warner merger makes so much sense in the long haul - owner's economics and continued content resale to competitors. AT&T's longterm DTV play is to compete effectively outside of its wireline footprint. That's already in motion with its DTV satellite business but in comparison DIRECTV Now's customer acquisition costs are minimal as social media will be the foundational component in this streaming service. As John Stankey put it, DIRECTV Now is going after underpenetrated subscribers that do not want to have a longterm wireline contract, are transient/mobile and may not pass credit checks. These are the same traits for subprime, prepaid and millennial demographics.

PRICING

One of the biggest question marks was the package pricing as only a $35 price point had been leaked earlier. Well, there are two $35 price points - one promotional and the other, 'permanent.' The promotional price will certainly draw a great deal of interest and potentially eat into cable & Verizon FiOS bundles - double and triple plays, especially when the consumer can save money on the set top box/DVR rental (i.e., I pay $12/mo).

 

Directvnow launch from 556Ventures

DISTRIBUTION

I give AT&T's DTV folks credit in lining up all the relevant distribution partners of the DIRECTV Now app - on Apple TV, Roku and Amazon Fire TV (Chromecast is missing - I guess for now) as well as in the expected iTunes and Google Play stores. The Apple allure will be a huge driver for DIRECTV Now's success with Prepaying 3 months of service and receiving a free Apple TV.

One other surprising and disruptive approach is aligning with LeEco, the emerging Chinese consumer brand of smartphones and televisions. Here, a DIRECTV Now subscription is thrown in (terms vary by device). This DTV/LeEco deal will surely go a long way to build LeEco consumer brand awareness faster and more impactful than that of Huawei, ZTE, OnePlus, etc.

I can go further in the UI/UX but that's for another post.

More U.S. Spectrum Thoughts with RCRTV

RCR followed up the previous U.S. spectrum webinar with a RCRTV session in which Dan Meyer (Editor in Chief of RCR Wireless News) , Jeff Silva (Medley Advisors) and I go into different topics. Some of these included the H-block spectrum auction/DISH strategy, unlicensed spectrum/3.5GHz, regulatory progress, Cable WiFi, etc.

DISH Has Terrestrial Approval - now what?!

Now that the FCC has approved terrestrial use of DISH's 40 MHz of spectrum (2000-2020 MHz and 2180-2200 MHz), what are its options?

1. Build it out - it's capitally intensive to build out a national network so a wireless carrier partner is necessary.  Why a carrier? It's in their core competency to implement and run networks.  Sprint is in the best position to meet DISH's wireless buildout goal with its Network Vision (spectrum hosting capability) strategy.  Stating the obvious - having a carrier such as Sprint host allows DISH to bring services up quickly and minimize a huge self-built price tag.

2. Sell the spectrum - getting money in the short term is always desirable.  But as the industry has seen, spectrum will always appreciate.  Yet there's been precedence for this. Spectrum Co (cable companies) sold its AWS spectrum to Verizon Wireless. They realized an appreciation in the base price from when they bought it in 2006.  More important aside from the money, cable companies (Cox, Comcast, Bright House and Time Warner) has strategic wireline and wireless possibilities with Verizon/Verizon Wireless.  With this in mind, DISH could cut a sale deal and wholesale at favored rates from the buyer. Presumably, the spectrum buyer will be a wireless carrier. Sprint would make the most sense.

BUT........
 

Don't forget the devices that will run on the DISH spectrum. Device and chip makers haven't exactly created product yet to meet this need. There is a ramp up time to incorporate it into the product portfolios. It doesn't happen overnight - look at the time in which Sprint/Clearwire announced TD-LTE 2.5 GHz support to when devices will have that band and technology incorporated.  This is a factor in both the above scenarios.

Let's see what DISH does.........