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AT&T Turns Lemons Into Lemonade

AT&T is taking the hits now, to be better for the long haul. This is how I read today’s announcement about reducing earnings. The reason for the announcement has to do with the concept of guidance, which is what public companies either do as practice to tell investors what's going on, or choose not to do and let analysts do that for them.

But getting beyond what's required to prevent any more MCI Worldcon's or Enrobs in our publicly traded world, one has to look more deeply.

1) AT&T is shedding a high cost operation in states where they either have no real heavy penetration or where the competition has already picked off the customer. Andy says, why fight with old technology when you have newer more profitable ways to do it with CallVantage.

2) AT&T has CallVantage and now can reallocate resources to sell more of it and drive adoption. Why? Because VoIP is a hot commodity these days and by adding subscribers there, versus shedding them elsewhere their churn will be less overall and their costs of both acquisition and ability to maintain will be less. Remember, CallVantage is so simple to use and administer for users, like Vonage is, that the frictionless nature of its business translates to lower costs.

3) Less Unions. Sorry to all those who are in the CWA, but this also means no need for installers and repairmen. That means, retirement. Smart installers and repairmen have already gotten into the home and small business networking and moonlight doing that. Expect more to move in that area. That all lowers the AT&T overhead in areas where they were still unionized.

4) More synergy. As a CLEC other than billing and the core network, there wasn't a lot of synergy. If anything the CLEC side of AT&T competes with the VoIP and soon to be alive wireless business. While those two co-exist nicely, the CLEC is threatened with being made obsolete. Do they want to be the aberration or the harbinger of things to come? My vote is with the harbinger.


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