How AT&T overtook Verizon in strategic business services

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In Q4 2012 Verizon was No.1 in Strategic Business Services (SBS) and had just bought a huge data centre provider. In Q4 2014, AT&T had overtaken Verizon in revenues from this segment. What happened, and what are the lessons for other telcos in the Enterprise SBS market?


Format: PDF filePages: 22 pagesCharts: 17Author: Alexander HarrowellPublication Date: May 2015

Table of Contents

  • Executive Summary
  • ‘Strategic business services’ – US telcos’ new frontier
  • AT&T vs. Verizon
  • A consistent difference in SBS growth…
  • … in an increasingly competitive and fragmented market
  • How Did AT&T Do It?
  • Verizon has partially de-emphasised its wireline activities
  • AT&T’s successful bundling strategy
  • AT&T’s open value networks
  • Did technology choices make a big difference?
  • STL Partners and Telco 2.0: Change the Game

Table of Figures

  • Figure 1: Defining strategic business services
  • Figure 2: AT&T’s business customers spend a lot
  • Figure 3: ARPU growth in Business Wireline has been strong compared to wireless
  • Figure 4: Line loss in SMB is a real problem for AT&T
  • Figure 5: Ex-SBS, AT&T Business Wireline is shrinking
  • Figure 6: AT&T is No.1 in US enterprise, ahead of Verizon
  • Figure 7: SBS is meant to be a growth sector but it has stalled for Verizon recently
  • Figure 8: 18 months that changed the game
  • Figure 9: AT&T is successfully bringing over its business customers and Verizon…isn’t
  • Figure 10: Growth-share matrix for AT&T’s segments.
  • Figure 11: Telecoms Operator SBS Revenues and YoY Growth, 2014
  • Figure 12: Amazon AWS and Microsoft Commercial Cloud Revenues, 2012-14
  • Figure 13: The growing wedge between AT&T and Verizon’s wireline capex
  • Figure 14: AT&T Network Suite driving sell-through of additional services
  • Figure 15: Google etc. make their own. IT companies go open-source. Telcos buy into VMWare’s proprietary ecosystem
  • Figure 16: Not all telcos, though – AT&T committed early to OpenStack, more like a big technology player than a telco
  • Figure 17: Three operator strategies in the cloud

Technologies and industry terms referenced include: