What The Numbers Mean for AT&T

AT&T had their numbers slip out last week in their filing with the SEC on the proposed merger in a story missed by many that ran in the Newark Star-Ledger. It did not slip by Halepern Capital's Keith Dalrymple however.

On the face Dalrymple says AT&T is behind on their subscribers, through December 31 of last year. In reality many more boxes were likely sold through to customers that were not yet activated, especially by people who received CallVantage as a holiday present and were awaiting the porting over of their pre-existing telephone number from their RBOC.  He also thinks AT&T's brand recognition should translate into sales. The fact is AT&T since the early fall has cut back all marketing of the service, yet the activations continue.

People forget that Packet8 with only 40,000 or so subscribers has been at this for a few years and Vonage, which really only ramped up last year was under a hundred thousand in subscribers for the first three years of their life, with a much more aggressive spend level to get activations.

Given how they keep selling new accounts, while their marketing spend is almost nil, it's apparent the shift in strategy from full out ads and promotion in the middle of 2004 changed to a more PR driven approach. Likely this has to do with their carefully planned entry into the enterprise market. This is where AT&T's business model of being disciplined, versus the drunken sailor approach of spending ad dollars towards a market that doesn't know what they may want.

When you look at what AT&T showed at the last three VoIP events that matter (Fall VON, Internet Telephony 2.0 and Spring VON) while CallVantage showed up, what was really being pushed was the business VoIP offerings that take advantage of the CV platform, but go further to deliver and offer what business customers want. I don't see any other carrier, i.e. MCI or Sprint even on the floors of those shows, nor is Level3 doing anything more than clowning around.

I tend to look at the revealing of numbers this way. The current base of customers is a good start and a great proof of the service being able to work. Those customers become ambassadors for the new customers to come.