«People have been very distracted by our earlier announcements, but it’s always been our goal to pivot toward our Internet phone service,» said Cathy Martine, AT&T’s senior vice president for Internet telephony. «That’s where we see the future and where we can control costs.»
AT&T (NYSE: T) may be your grandma’s phone company, but it is also trying to be the company of the future with its new Internet phones.
Even as it is getting out of the business of providing traditional phone service to consumers, AT&T is aggressively pushing its Internet phone plan, CallVantage, in hopes of making up for its faltering
Like its rivals Verizon, Vonage and Time Warner Cable, AT&T is attracted to the service because Internet telephony is cheaper to offer to businesses and consumers and requires less upfront investment than the old copper wire and traditional switching networks. But can AT&T, which introduced its first Internet phone plans in March, win over consumers now that it has announced that it no longer intends to market its ordinary local and Despite plenty of skeptics, AT&T thinks it can. Distracted by Earlier Announcements AT&T spent $25 million on advertising during the Olympic Games this month to promote the service, a significant amount given that the company’s retail business declined by about 15 percent in the past year. In recent weeks, the company expanded the markets where its Internet service is available, to 170 metropolitan areas, and said retailers like Best Buy (NYSE: BBY) and Amazon.com (Nasdaq: AMZN) would sell the modem needed to make the Internet phones work. The advertisements during the Olympics, Martine said, «are all part of our CallVantage, which connects calls over broadband lines and avoids some taxes imposed on phone companies, is 20 percent to 30 percent cheaper than ordinary phone service. Drawing in Consumers But it is far from certain whether AT&T has the muscle to win control of the emerging Internet phone from Nor is it clear that its favored AT&T also has to persuade consumers that Ma Bell, with its 125- year history, is the phone company of the 21st century. While AT&T no longer operates vast local phone networks, it is still closely associated with the business, and its most loyal customers are typically older consumers who grew up when it held a Internet Phones «The people who are buying Martine said AT&T was using direct mail and online advertisements to reach consumers who already had broadband lines, the group most likely to sign up for Internet phones. The television ads, which were booked well in advance of the Olympics, were intended to introduce the product to groups who may not have heard of Internet phones before. «We’re trying to make real for customers what this is about,» Martine said. The commercials, she added, try to address consumer fears by calling Internet phone service «the reinvention of the phone company from the people who brought it to you.» In one Finally, the screen flashes the promotional price for the service: $19.99 a month for unlimited local and Three other Local Phone Customers But AT&T will not say how many total subscribers it has, making it difficult to gauge how large a lift it has received from the promotions or whether the company is on track to meet its target of signing up one million business and retail users by next year. While existing AT&T customers can continue using their local and By retreating from the traditional phone business, AT&T hopes to slash expenses, particularly the nearly $1.9 billion it spent on ads and promotions last year. David Dorman, the AT&T chief executive, said that the company was taking a measured approach to the Internet phone business, and $25 million for an ad campaign could be considered «measured» by industry standards. AT&T’s brand, though damaged by the company’s decision to retreat from the traditional phone market, still has drawing power, analysts said. «Customers like the idea of something new, but they feel very uncomfortable about trying a new company,» said Jeff Kagan, an independent telecommunications industry analyst. «Their brand name is going to be very important.»
«People have been very distracted by our earlier announcements, but it’s always been our goal to pivot toward our Internet phone service,» said Cathy Martine, AT&T’s senior vice president for Internet telephony. «That’s where we see the future and where we can control costs.»
AT&T hopes that the lower price will help it draw customers who would have abandoned the company for the Baby Bells, which now offer the full range of telephone services. In the coming months, AT&T also plans to introduce a wireless plan that, in theory, could be packaged with its Internet phone service at a discount.
Internet phones, though, have been favored more by younger,
AT&T said subscribers had signed up in record numbers after the first ads ran. Subscriptions also doubled the following week, compared with the week before the Olympics, which began on Aug. 13 and ended on Sunday.