Economics AT&T Research Paper
Given the extraordinary explosion of mobile computing and wireless communications, continued advancements within the global telecommunication industry are certain. A number of trends drive this evolution including the advancement of devices and network access technology, changes to users’ consumption patterns and services compositions, a shifting industry structure, and finally the future of regulation in the telecoms industry. In order to maintain its position in the ferociously competitive telecoms field, AT needs to consider these trends and other forces of change to gauge its potential within the market.
AT currently maintains a strong presence in each competitive market in which it participates including local & long distance telephone, wireless services, existential internet & cable services and business Ethernet and Voice over IP (Poi) services. Residential landlines telephony is quickly becoming extinct, a fact AT is well aware of as they have focused on expanding their wireless G and Wi-If networks and instead offer residential telephone services under their U-Verse product which combines home internet, telephone, and cable services.
Its competitors in the U-Verse arena include local cable/home internet/telephone providers, and national cable TV giants Time Warner and Compact, along with satellite providers Direct and Dish Network. In terms of wireless subscribers, AT is
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While the local and long- distance telephone market is composed of several competing vendors in a monopolistic competition, the cable television and wireless markets are certainly an oligopoly with only a handful of real players. Future market structure within the telecoms industry is heavily influenced by government regulations. AT is no stranger to government regulation and can expect government regulations to influence the telecommunications market now and in the future.
Historically, AT has been shaped by government regulation, particularly from the Justice Department and the Federal Communication Commission. Facing opposition from both the Justice Department and the FCC, the failed acquisition of T-Mobile last year cost AT a cool four billion dollar break-up fee demonstrating the impact government regulation has Economics AT Research Paper By cyclically the wireless spectrum for smartness is a major obstacle for AT in its efforts to roll out its G network nationwide (Wiggle, 2012).
Continued wrangling with government regulations is a certainty, future trends in this category include ongoing regulatory challenges with the potential to influence AT bottom line more than any other single factor aside from advancements in technology. New technologies in wireless communication and consumer electronics dictate the future of the telecommunications industry as a whole, including AT and its competitors. Looking at the impact the smartened has had upon the society indicates that the next innovation in communications technology will be Just as revolutionary.
Consumers increased demand for speed (greater bandwidth) is already yielding technologies that far surpass the standards in place today. Broadloom Corporation has already released chips supporting the soon to be ratified 802. 1 lack standard, more commonly known as 56 Wi-If, and emerging technologies (in HDTV, tablets, and smartness) supporting higher bandwidth throughput’s are certainly on the horizon (“56 Wi-If”, 2012).
Staying abreast of progressive technological innovations is vitally important to AT&Ts continued success as a mega-carrier, offering a range of telecommunications reveries. In the fast-paced digital era with more and more devices accessing the internet, AT&T would be wise to seek out future trends in technology to gain a competitive edge. Advances in consumer electronics and wireless technologies combined with consumer preferences, will heavily influence future profitability for AT&T. Shifting consumer preferences is another trend that AT&T should monitor for future success.
With the explosion of mobile computing, AT&T’s “three-screen integration” strategy that delivers services to a customer’s television, PC or mobile vice vastly increases their potential in the telecoms market. Providing customers with a single bill and service provider for bundled wireless phone, cable television, and internet services in addition to anywhere access in terms of IP services is what modern consumers demand as internet connectivity and cellular phone services have become items of necessity instead of a luxury.
AT&Ts U-Verse product as a one- stop for residential cable/internet/phone customers has proven to be a contender in the lucrative cable television market whose prices have nearly tripled over the last decade (Barman, 2011). These rising costs may push consumers to leave cable and opt instead for lower-priced streaming options like Hull and Entitle. However, vast majorities of American households subscribe to cable television and broadband internet, so only a major shift in consumer preference, income, or technological advancements are likely to reduce the demand for AT&Ts services.
Supply and demand for the services AT&T provides are constantly shifting. Consumer tastes, expectations, income and the number of consumers are the principal factors for these shifts. As the demand for landlines phone service has waned, the demand for airless phone and data services have increased because consumers want mobile access as opposed to physically cabled service. The same holds true for broadband cable and home internet, consumer tastes and income prefer these services. Nielsen ratings reports that 90. % of US households pay for cable service and 75. 3% use broadband internet, percentages that have remained consistent despite a poor economy (“Reports & Trends”, 2011). The demand curve for wireless phone and data rightward, while the demand curve for landlines phone service shifts leftward as market demand is steadily decreasing. The equilibrium price and quantity for landlines telephone service has fallen where the equilibrium price for wireless phone/ data and home internet & cable has risen.
Considering the constant global demand for internet connectivity, cable television and wireless phone/data service, AT&Ts potential for continuously rightward shifting demand curves in these markets is nearly limitless given their considerable physical network and capital resources. Staying abreast of consumer tastes, expectations, and the number of consumers for their services/products to stay atop of future trends will be vital for AT&Ts future Roth. Growing demand for the services offered by AT&T ultimately leads to increased costs as well.
Both fixed and variable costs are extraordinary for a corporation of AT&Ts size. Their physical network infrastructure is composed of literally millions of lines and connections while their global internet backbone contains 940,000 fiber route miles and 38 internet data centers (“AT&T Company Information”, 2013). While the actual fixed cost of the facilities, hardware, power and cooling for this technology is not public information, it is no stretch of the imagination to put those fixed costs in the billion-dollar range.
According to Forbes, AT&T employs over two hundred and fifty thousand people putting their variable costs in the millions to be sure (Woke, 2011). In addition to wages, AT&T offers a variety of benefits to their employees including medical/dental/vision insurance, 401 (k), paid time off, tuition reimbursement, life insurance and a host of other fringe benefits including discounts on their products and services (“AT&T Careers”, 2013). Since costs factor heavily into AT&Ts bottom line, monitoring and controlling them is advisable and future profitability hinges upon the total cost of production.
Taking into consideration the law of diminishing marginal productivity in regards to the number of employees needed to produce/maintain their products and services will be an important factor in the determining costs and ensuring productivity and efficiency. With increased demand for their services, AT&T can expect increases in both fixed and variable costs. In turn, those costs will ultimately affect AT&Ts pricing of their products, although other additional factors will influence pricing decisions as ell such as the prices their competition offers for like services.
The cost structure at AT&T, because of their sheer size and the array of services and products they provide, is a complex framework of the relationships between different costs and their behaviors. Future growth is dependent upon AT&T continuously evaluating customers and value propositions, resources and activities, partners and relationships, in addition to supply and demand. If the last decade is any indicator of what the next decade will bring for the telecommunication industry and its players, AT&T has a number of factors to consider in regards to future potential.