AT&T’s A-List Eliminates the Competitive Gap Against Verizon Wireless’ Friends & Family

| Sep 11, 2009 | Wireless Services - U.S. | Competitive Intelligence Report

| Analyst: Bill Ho

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

September 9, 2009 – AT&T announced A-List with Rollover, a built in benefit that allows customers to make unlimited calls to domestic wireline or wireless phone numbers at no additional cost. Customers with individual Nation plans of $59.99 or higher will have five unlimited umbers. FamilyTalk customers with plans $89.99 or higher will share ten unlimited numbers. A-List numbers may be managed at www.att.com/alist and is expected to be available on September 20.

Analytical Summary

• Current Perspective: Positive on AT&T’s announcement of A-List, a built-in benefit that provides for unlimited calling to five to ten designated numbers on individual and family plans, because it alleviates the competitive pressure from chief rival Verizon Wireless’ same unlimited calling feature known as Friends & Family. More importantly, A-List gives AT&T a value message within its Nation plan portfolio and again presents the Rollover feature as a more relevant value differentiation, especially in a bad economy. Still, the fact it took AT&T nearly seven months to match Friends & Family and the trend on following Verizon Wireless’ rate plan moves instead of leading and innovating is disconcerting.

• Vendor Importance: Very high to AT&T as it could not afford to allow such a substantial and competitive unlimited calling feature to go unmet. It is also timely and important for AT&T as the industry goes into the Q4 holiday selling season in which new carrier phone introductions could enable both switching and retention.

• Market Impact: Very high on the wireless services segment as Verizon Wireless and T-Mobile USA now have less of a value differentiation against AT&T. Now that three big carriers have some form of unlimited choice calling from five to ten numbers, Sprint is the only major carrier left without such feature even though it has now upgraded its Everything Data plans with unlimited mobile-to-any-mobile calling. Sprint may still be hurt in its bread and butter voice customers, however. For the regional carriers, Alltel is sitting well given more unlimited My Circle calling numbers, but this ups the stake for the likes of U.S. Cellular and smaller operators such as Cincinnati Bell Wireless that have depended on providing more anytime minutes at the same price points as a key service differentiator.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Verizon Wireless should point out that AT&T’s A-List is just a copy of Friends & Family. It should continue its network reliability messaging in light of the negative press that AT&T has received with its network, pointing out its long history of JD Power accolades on network and call quality.

• T-Mobile USA cannot stand to allow larger carriers to equal its myFaves number count as this jeopardizes its value-centric reputation. It should consider including unlimited messaging within its myFaves plans or consider increasing the number of myFaves numbers to greater than five to offer differentiation. On a portfolio basis, T-Mobile should make myFaves the flagship plan and discontinue the standard Individual plan portfolio as having a variety of plan portfolios may provide choice, but it can also confuse customers and sales representatives.

• Though Sprint has already made its Q4 move with the Any Mobile, Anytime initiative for its Everything Data Plans, it should not forget its voice-centric base who may want some something similar to A-List, Friends & Family or myFaves. Sprint should consider creating a new add-on feature that builds on its close relationship with the NFL by introducing “Pick 6” where customers can call up to six numbers for $6/month. This offer should replace the Sprint to Home $5 add-on.

Recommended End User / Customer Actions

• AT&T customers that are heavy talkers, but are not subscribed to the Nation 900 individual plan or FamilyTalk 1,400 minute plans should consider upgrading. On the flip side, AT&T customers with higher price point Nation plans should consider downgrading their plans provided they examine their calling patterns and see what numbers they call most as they may be best served with the new A-List feature.

• Current Alltel customers (in markets AT&T will acquire) who are heavy talkers and on My Circle plans should keep these plans as transitioning to the AT&T Nation portfolio with the A-List feature is no bargain. Of course if the Alltel customer wants access to expanded data services (e.g., CV, AT&T TV, etc.), then Nation plans may be a better fit. Still, it’s likely that upon integration, new GSM-based devices will likely be required and current CDMA handsets will become obsolete.

• Customers looking at T-Mobile’s myFaves will still see that myFaves plans are less expensive than AT&T and Verizon Wireless plans. In fact, a 300 minute anytime myFaves plan with five unlimited calling numbers is offered for $40/month. Family myFaves customers also receive five unlimited calling numbers per line of service with family plans instead of sharing ten numbers amongst all users.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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