Another year has come and gone. Frost & Sullivan ended its fiscal year 2016 at the end of September, and last week marked the start of a new year. It also marked the 9th Annual AT&T Analyst Summit. In an environment where many telecommunications and IT companies are trimming down their interactions with analysts, AT&T continues to host over 120 analysts at their corporate headquarters in Dallas, TX. As has been the norm, AT&T is not shy about parading a never-ending stream of senior executives who have the privilege (or aggravation) of hosting some of the most inquisitive and combative people in the business.
Every year a theme emerges from the analyst summit that carries over into the initiatives of AT&T for the next 12 months. Last year it was IoT, the expansion of AT&T in Mexico, and the acquisition of DirecTV. This year the Business Solutions theme was Smart Platforms. A focus on software-defined and virtualized platforms will be paramount to the initiatives that we expect to see from AT&T in 2017.
The strategy to focus on software will help transform AT&T from a telecommunications company to a technology company. This move reinforces AT&T as a leader in an industry that is constantly evolving and proactively innovating for future growth opportunities. The move to software-defined networking helps AT&T not just offer services in the US and Mexico where they have local connectivity, but across the globe where they do not have network assets and must rely on partners to service customers. With its smart platform, AT&T can provide a seamless and consistent global experience across its Network on Demand platform and FlexWare devices and applications, with secure access to cloud services through a large partner network.
Now let us discuss some of the complementary themes highlighted at the conference:
Over the past year or so, many AT&T executives have deemphasized the notion that cellular connectivity alone is the future of the company, instead focusing on the company’s ability to manage and connect devices across multiple networks and connectivity protocols. The narrative has evolved from the realization that cellular connections are a bucket in the ocean. To succeed in connecting devices globally, AT&T must have the ability to support and manage devices across all types of networks from fixed-line to local area or wide area wireless networks. To help achieve the goal of reducing infrastructure costs of connecting the “last mile”, AT&T recently announced Project AirGig which can deliver low-cost, multi-gigabit wireless internet speeds using power lines. This is a significant evolution that enables high-speed connectivity in areas that would be very expensive to drop fiber lines. Not only does this enable connectivity to remote areas for residents, but it is a significant step in ensuring ubiquitous connectivity for IoT at lower cost.
Multi-Platform Content Distribution
Many companies are attempting to develop solutions that can distribute content across various platforms, on televisions, computers, mobile devices, and in vehicles. With the integration of DirecTV to its portfolio and the upcoming DirecTV Now streaming service, AT&T leads the industry in streaming on-demand and live content across all platforms. The strategy is not only competing with pure play cable providers but focusing on millennial users that are highly likely to be cord cutters. In addition, by increasing its fiber footprint across the country, AT&T is making significant strides towards providing nationwide coverage for content distribution, something that even leading pure play cable operators such as Comcast and Spectrum do not have the capabilities to provide.
IoT Ecosystem Play
Traditionally, AT&T has focused on connectivity solutions for IoT with some solution development. Over the past year, AT&T has opened up its solutions to drive its IoT building blocks (M2X, Flow Designer and AT&T Control Center) on leading cloud platforms such as IBM and Amazon Web Services. This enables AT&T to productize its solutions and expand its reach beyond solutions that it develops for partners and customers. This move opens up opportunities for AT&T to generate revenues from its ecosystem and opens up the industry to develop best-of-breed solutions that allow easier device discovery across different ecosystems and the development of multi-network solutions dependent on customer needs, requirements and desired price points.
AT&T has made significant strides over the past few years to transform from a telecommunications company to a technology company. While the future outlook is always uncertain (as it is with any major transformation), the company has made investments not only in their products and services, but also in advancing their employees to have the skill sets to embrace this industry transformation. To date, 45% of AT&T Technology & Operations employees have developed new skills and over 1,250 of these reskilled employees have been hired or promoted internally. These metrics are a testament to AT&T’s commitment to this organizational transformation. To that end, bravo!