Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

AT&T's $50 billion interest in DirecTV is just one part of an ambitious expansion

Matt Hamblen | May 15, 2014
AT&T's apparent interest in DirecTV is only the latest move by the wireless carrier to expand into just about every wired and wireless market it can.

AT&T's potential purchase of satellite TV provider DirecTV for $50 billion is only the latest in a series of moves by the wireless carrier that shows it's hell-bent on expansion.

It's eyeing networks of all types — wired, wireless and satellite — and aims to get there by building its own or by buying other companies ouright. The strategy involves out-doing Verizon, Google, Amazon or other competitors so it can hold onto existing customers as new networks emerge that allow video gaming and other services over the Web.

While the dollar value of a DirecTV deal would be colossal by any measure, it comes just weeks after AT&T disclosed plans to build a gigabit fiber network in up to 21 cities to compete against Google Fiber; announced plans to offer fast LTE wireless connections to planes for faster onboard Wi-Fi; and has a range of upcoming initiatives for connecting wireless to GM cars and home monitoring systems. Those moves don't include the carrier's already established network of some 34,000 Wi-Fi hotspots nationwide.

Now the nation's second-largest wireless carrier, AT&T has 116 million wireless customers — close behind Verizon Wireless — and 16 million wired broadband subscribers, giving it a solid foundation on which to grow even bigger.

"AT&T is basically trying to sell more things to the same people, which should be easier than selling the old products to new people, although one doesn't exclude the other," said Roger Entner, an analyst at Recon Analytics. "AT&T is doing more of this than Google or Verizon or anybody and is absolutely at the forefront of selling more things to their customers. That's the nature of American business: if you don't offer something, somebody else does."

What's unusual with AT&T is that so many of its expansion efforts are happening at once and are so expensive.

Entner believes that AT&T's latest moves evolve from an overall strategy in which the U.S. telecommunications market has become saturated with now-conventional technologies.

"The wireless market is the last to enter the saturation point and the only way to get more revenue is by getting more money from the same people," Entner said. "From the wireless perspective, first you sold voice, then text, then data, then a smartphone and a tablet and now AT&T wants to sell you home monitoring and TV services where you are and also to sell it to you at home with DirecTV."

Entner believes if federal regulators approve the $45 billion Comcast takeover of Time Warner Cable, it would be logical to assume regulators would allow AT&T to buy DirecTV. "It would be the same logic: if you allow a massive TV giant on the ground with Comcast-Time Warner, then you should have no problem allowing a small terrestrial TV provider in AT&T to take over a satellite TV provider," Entner said.


1  2  Next Page 

Sign up for CIO Asia eNewsletters.