AT&T was divested as a long-distance company in 1984 and thrown into a competitive environment where long distance rates and revenues plummeted. AT&T’s fortunes and status decreased to the point where SBC, Southwestern Bell, was able to acquire the company in 2005 while keeping the AT&T brand name.
The reunited Baby Bell companies and AT&T were far diminished from the days when AT&T was at the top of the world. SBC and the other Baby Bells started to cut back on the maintenance and upgrade of copper infrastructure soon after the divestiture. The companies felt emboldened to do this since divestiture also brought the beginning of telephone deregulation. The big telcos were no longer strictly required to meet quality and performance standards, and they responded by trimming technicians and capital repair and upgrade budgets.
During the 1990s, AT&T turned its attention to becoming the largest cellular carrier. The company spent most of its capital in the 1990s on cellular networks, which was timed perfectly with the explosion of the cellular business where practically everybody in the country came to have a cellphone. But even in the cellular world, AT&T didn’t put as much money into its cellular infrastructure and spectrum as its competitors. When AT&T won an exclusive contract to market the iPhone in 2007, it quickly became clear to customers that the AT&T (Cingular at the time) network was inadequate.
AT&T next made several devastatingly bad investments. It bought DirectTV, which then lost half of its customers in a few ensuing years. AT&T was also apparently trying to keep up with Comcast when it spent $100 million to buy Warner Media. A few years later, AT&T unspun this deal and recognized a $47 billion loss to shareholders.
In the last decade, AT&T has been forced to spend a lot of money to upgrade its 4G and 5G networks. While cellular performance has improved dramatically for consumers, 5G still looks like a business plan looking for a revenue stream. Over the last decade, cellular competition has resulted in lower cellular prices for consumers, and it can be argued net 5G revenues for the industry have been a big negative. And now, the biggest cable companies are siphoning off valuable cellular market share.
AT&T and the other big telcos might also be facing an expensive effort to remove lead cables from the environment. Smaller telcos mostly replaced lead cables a long time ago, but it seems the big telcos never quite got around to getting rid of the lead.
AT&T has finally gotten serious over the last few years about building last-mile fiber networks for the future. The company built 500,000 fiber passings in the second quarter of this year to bring it up to 20.2 million fiber passings – with a goal to reach 30 million by the end of 2025. AT&T added 272,000 fiber customers in the second quarter to bring the company to over 7.7 million fiber subscribers. The company is still losing non-fiber customers and dropped 25,000 net broadband customers in the second quarter.
AT&T is late to the game compared to its cellular competitors in selling FWA cellular broadband and just rolled out its Internet Air product in April of this year. AT&T CEO John Stankey characterizes the company’s FWA plans as being used to replace copper infrastructure and perhaps to bid on BEAD grants in remote areas. But for now, the company is far behind Verizon and T-Mobile in selling cellular home broadband. But AT&T recently announced it now signing a ‘few thousand’ FWA customers daily.
It not particularly easy to equate AT&T with some of the recent events in the company, because for all practical purposes, the company has been run by folks from SBC. But a lot of mistakes have been made in AT&T’s name, and it’s somewhat sad to see how far the company has fallen since the early 1980s. AT&T has made mistakes that would have sunk a lot of other businesses, but it is still diverse enoughto generate the cash to keep trying over and over again.