AT&T Mobility CEO: 3G chase is over

With its network now nationwide and the integration of the former AT&T Wireless and Cingular now complete, de la Vega said AT&T has now dispelled any notions that the company is still struggling from post-acquisition operational difficulties.

“After the merger with AT&T Wireless, some predicted we would quickly lose our lead in customers,” de la Vega said. “Well, that was 36 months and 20 million new customers ago. I think we proved those people wrong. Our 67.3 million customers lead all U.S. customers.”

AT&T has maintained its subscriber lead over Verizon Wireless since the acquisition, but Verizon Wireless has stayed close and boasts that its is the largest U.S. carrier by revenue. VZW had 63.7 million customers at the end of the third quarter, substantially less than AT&T. But AT&T has garnered many of its new subscribers through a spate of recent acquisitions, including 1.7 million it gained from its purchase of Dobson Communications. If it weren’t for its acquisitions and AT&T’s recent success with selling the iPhone, VZW would be on the verge of overtaking AT&T for the first time since the merger. One of the keys to VZW’s success has been its churn rate. At an overall 1.27%, its churn rate leads the industry and its post-paid churn is below 1%.

Instead of shrugging off the customer retention gap between VZW and AT&T, however, de la Vega took it head on. He said in the next year, AT&T planned to overtake Verizon Wireless in post-paid churn by systematically cutting 35 basis points from its post-paid rate of 1.31%.

De la Vega gave specifics: The sunset of its time division multiple access network (which Cingular and AT&T Wireless replaced with GSM) would remove high-turnover legacy customers from its roles, cutting churn by estimated 6 to 7 basis points. Bundling services with AT&T’s wireline units such as fiber TV services, DSL and local voice will increase customer stickiness cutting that rate a 2 to 3 points. The big gains, however, would come from network quality and customer service, de la Vega said. Service quality and coverage is the number-one reason for customers leaving, he said, so network upgrades will account for 12 to 16 basis points of improvement. Improvements in customer service and relations will knock off another 6 to 8 basis points, de la Vega concluded.

De la Vega also used his time at the AT&T Investor Day to highlight AT&T’s strengthened spectrum portfolio as well as reiterate AT&T’s latest assertions that it is the most open wireless network in the country. After VZW announced last week it would open its network to any device or application, AT&T retorted that it has for years maintained the open access platform that VZW described. By virtue of SIM card technology, AT&T customers can bring any GSM phone or device onto the network as long as it supports the proper frequencies. De la Vega added to AT&T’s argument saying it supports all mobile operating systems and even on devices locked to the AT&T service it has allowed the download of third-party applications, though it does not support them.

“Open access can mean different things to different people,” de la Vega said. “Customers want good choices, good prices and the ability to get the applications and content they care about. … The bottom line is that AT&T is most open carrier in the U.S., and we will continue to provide our customers with more choices at good prices going forward.”

On the spectrum front, de la Vega said AT&T is well positioned to meet capacity demands in the future. It now has an average of 68 MHz of spectrum in the top 100 markets—58 MHz in the cellular/PCS bands and 10 MHz from the AWS auction. Its pending acquisition of Aloha partners will add another 12 MHz of 700 MHz spectrum in 72 markets of the top 100 markets, giving it as much as 77 MHz in most of the largest U.S. cities. AT&T has also signaled its plans to bid for more licenses in January’s 700 MHz auction.