AllThingsD » Randall Stephenson

AT&T Earnings: $3.8 Billion Net Loss, $32.6 Billion in Revenue, 1.1 Million New Wireless Customers

Ina Fried — Thu, 24 Jan 2013 21:15:42 +0000

AT&T reported a big fourth quarter loss, though it was narrower than the one posted a year earlier as the company saw a significant jump in wireless subscribers.

The company posted a net loss of $3.8 billion, or 68 cents per share, on revenue of $32.6 billion. That compares to a net loss of $6.7 billion, or $1.12 per share, on revenue of $32.5 billion in the same quarter a year ago.

Excluding various pension, storm and other charges, the company said its adjusted per-share earnings would have been 44 cents per share, up 10 percent from a year ago but a penny below what some analysts were expecting.

On the wireless front, AT&T said it added 1.1 million total wireless subscribers, including 780,000 new contract customers. It also added 246,000 non-phone “connected devices” in the quarter.

The company added that 6.6 million subscribers, or 9 percent of contract customers, are on one of its new shared data plans. In all, the company said that two-thirds of its smartphone customers — some 31.7 million — are on some sort of tiered data plan. Interestingly, the company said more than 25 percent of shared data plans are opting for a pool of 10 gigabytes or more of data.

It said it had a record quarter for Android and Apple smartphones, selling 8.6 million iPhones in the quarter. Roughly 9 in 10 new contract customers are opting for a smartphone.

AT&T also saw gains for its U-verse high-speed Internet TV service. The company added 192,000 TV subscribers, reaching 4.5 million in total and added 609,000 U-verse Internet customers. That gives it 7.7 million total U-verse Internet subscribers and allowed the company for the first time to have more U-verse Internet subscribers than it did DSL.

The company also said last week that it would have a variety of one-time items this quarter including a $10 billion pension-related charge as well as $175 million in costs due to Hurricane Sandy and other storms.

It also said it would be under profitability pressure after selling 10.2 million smartphones last quarter, given that such devices typically carry higher subsidies than traditional phones.

But, on the call, AT&T’s CFO said that the company is more than happy to make such an investment, given the higher monthly revenue generated by smartphone customers.

Update, 1:30 pm PT: On a conference call with investors, AT&T said it has closed 50 different deals to boost its wireless spectrum holdings, moves that increased average national spectrum by a third.

Also of note, greater than 15 percent of its shared data customers are switching over from an unlimited data plan. The 6.6 million devices on such plans represent about 2.2 million accounts, for an average of three devices per Mobile Share account.

1:55 pm: CEO Randall Stephenson said the company expects per-share earnings growth at least in the high single digit percentage range as well as greater than 2 percent revenue growth for 2013.

“I like how we are executing,” Stephenson said. “I like the moves we are making.”

Asked about recent quotes saying AT&T might be interested in making acquisitions overseas to continue its growth, Stephenson said that the U.S. is outpacing other countries in next-generation networks which could create opportunities amid inevitable consolidation.

“Most people expect the rest of the world will catch up,” Stephenson said.

One of the questions, Stephenson said, is whether AT&T can expand at the service or application level outside the United States. For example, AT&T is licensing its new Digital Life security service to other carriers.

Also of note, AT&T said it will be watching to see how consumers take to T-Mobile’s shift to handset financing as opposed to subsidies. Stephenson said he “kind of likes the idea” and AT&T might follow suit.

Sprint, Verizon, AT&T and T-Mobile CEOs Square Off in New Orleans

Ina Fried — Tue, 08 May 2012 21:22:40 +0000

It’s easy to hear what one of the major carriers has to say.

After all, their ads flood TV screens, their billboards dot the highways and it often seems there is a store at every strip mall.

But it’s harder to hear all four carriers at once. Such a gathering was expected at last year’s CTIA show, but T-Mobile’s CEO pulled out after AT&T announced its proposed deal on the eve of the show. The three remaining CEOs did share a stage in a panel moderated by CNBC’s Jim Cramer.

This year, though, top executives from all four are slated to face off in an afternoon keynote again moderated by Cramer.

AllThingsD will have live coverage starting in just a few minutes, at 4:30 Central Time (2:30 pm PT).

Earlier:
4:38 pm: CTIA chief Steve Largent is onstage, introducing the four chiefs.

4:39 pm: Dan Mead is onstage now, talking on his own. Checking into what is going on…

Of course, left to his own devices, the Verizon Wireless CEO is talking about the spectrum crunch. If preaching to the choir were illegal, most of the folks at CTIA would be in jail by now.

I thought this was supposed to be a roundtable. But we are getting a stump speech. I hope there won’t be four of these, but starting to fear the worst.

4:44 pm: Okay, I’m told that there will be a roundtable, but first we have to sit through four speeches.

4:45 pm: Mead is advocating for Verizon’s pending deal to acquire spectrum from the cable companies.

We’re confident regulators will understand this purchase is good for Verizon Wireless customers and the entire broadband economy, Mead said.

Mead touts Verizon’s recent offer to sell off some other spectrum if regulators give the cable deal the okay.

4:47 pm: All right, Mead’s done. Next up: Sprint CEO Dan Hesse.

Hesse is talking LTE, or as he calls it “Lots to Explain.” Many customers don’t know what 4G is and Hesse says the industry has itself to blame.

He notes that even the oil industry gets higher satisfaction ratings than cellular carriers do.

4:52 pm: Hesse takes aim at well-liked tech companies like Apple and Amazon.

“They are called over-the-top players because … they ride over the top of our enormous capital investments.”

4:54 pm: Next up in Hesse’s speech is talk about trust and privacy. There’s a lot of talk, Hesse said, but “it’s difficult to separate myth and reality.”

A lot of politicking and shrill talk from interest groups, Hesse said. “For most consumers, it is just too complicated.”

Sprint promises it will offer independent audits and other moves so customers don’t have to offer “blind trust.”

Now he’s touting the Sprint Guardian services that it introduced earlier today.

5:00 pm: Hesse promises a new mobile advertising program coming soon, giving consumers control and options.

Hesse said Sprint will enlist an outside firm to verify the company is delivering what it says, like financial auditors do for the books.

Hesse said the industry can also work together in some of these areas. “Collectively we need to build trust,” he said.

5:03 pm: Hesse wraps up, ceding to T-Mobile CEO Philipp Humm.

5:05 pm: T-Mobile is back, Humm begins, echoing the refrain he has been repeating since the Consumer Electronics Show in January.

Humm offers a subtle take on data and congestion — “Intelligent unlimited rate plans are the future,” Humm said. One can assume that by intelligent, he means plans like T-Mobile’s that throttle users once they hit a certain data cap.

5:07 pm: Yep. Now he’s touting T-Mobile’s take on data plans, offering unlimited with no overages but limits on how much 4G data they can consume.

Humm promises more of the same to come.

“That won’t be enough,” he said, noting that T-Mobile and others need innovative technology and additional spectrum.

In the U.S. the spectrum problem is particularly acute.

Humm touts what T-Mobile is doing to make the best use of the spectrum it has. Will be interesting to see if he jabs back at Verizon, which T-Mo has accused of warehousing excess spectrum.

So far, he’s just talking about other technologies like Wi-Fi offload and off-peak delivery.

5:11 pm: “We had nine tough months under the pending AT&T deal, as you can imagine.”

The company releases first quarter earnings on Thursday, so Humm isn’t saying much about where things are at right now.

5:13 pm: T-Mobile tripling business salesforce as the company attempts to evolve into a serious business-to-business player.

Humm said T-Mobile wants to be known for more than just low prices.

5:15 pm: T-Mobile is back going after AT&T and the iPhone. New ad shows Carly on a motorcycle speeding past the AT&T iPhone.

OK, last of the stump speeches as AT&T Mobility unit President Ralph de la Vega takes the stage.

5:17 pm: De la Vega touts a PC World study that found AT&T’s LTE network to be the fastest (Verizon touts a separate one that found its network fastest).

5:18 pm: De la Vega now pitching the home security service it introduced on Monday.

I never thought I’d say these words: “I can’t wait for Jim Cramer.”

5:32 pm: De la Vega wrapping up, leaving just under a third of the 90 minutes for the roundtable.

5:33 pm: Boo-yah. Here’s Cramer.

5:35 pm: Cramer starts by giving each company one minute to answer a few questions. Biggest innovation since last year.

De la Vega: A year ago there were more PCs than smartphones and tablets. Now that’s changed. “The Internet is going mobile.”

Hesse: The fact that T-Mobile’s Humm is onstage. “He was tied up with a gag a year ago.”

Mead: Video delivery over mobile devices.

5:37 pm: Next question: What are we going to have a year from now that we don’t know about now.

Mead: I think you are going to see a lot more activity of consumers exploring what they can do on LTE.

Humm: Evolution from access provider to service providers. Voice and text will decrease in importance.

Hesse: Privacy, safety and security will replace speed and technology as the main point of discussion.

De la Vega: Mobile payments. “It’s time for the smartphone to replace the wallet.” Partnerships are coming together.

5:44 pm: Cramer challenges Mead on whether Verizon has too much spectrum.

“We don’t have the most spectrum,” he said. “We have the most effective use of spectrum.”

5:47 pm: Hesse expands on challenges facing wireless carriers. “Our Achilles’ heel is trust and reputation,” Hesse said, calling it a “crisis.”

There is an opportunity to sell more to consumers if the industry can turn things around. “If they trust us they are going to buy from us.”

Cramer asks about T-Mobile’s new ad touting its network as being faster than AT&T’s iPhone.

“It ain’t true,” de la Vega. “That’s why this industry has a bad rap because we take the truth and we stretch it.”

Humm clarifies that the ad is pointing out that the iPhone is slower, not AT&T’s LTE network, which is faster.

5:55 pm: Cramer asks Humm if without an iPhone to sell, isn’t T-Mobile forced to just race to the bottom on price?

“Pure price competition would be the wrong way to go,” Humm said, saying that it needs to find different kinds of unlimited offerings.

5:56 pm: Asked about the impact of cellphones in uprisings across the globe, Hesse noted that phone ownership varies and so does the impact.

Very high in places like Egypt, but lower in Syria and very very low in North Korea, at 4 percent.

The privileged are the ones who have cellphones and they are not going to want to upset the applecart, Hesse said.

5:59 pm: Could T-Mobile USA go public? “I think it is the perfect audience here to make a big announcement,” Humm said, before, of course saying little.

Hesse won’t comment on whether Sprint is looking at any big deals, but notes the company is focused on its network transition. “A deal would have to be very compelling for us to do it at this time.”

6:01 pm: Cramer asks the panel if Facebook is a good thing for the industry. All agree that it is, but Mead won’t comment on whether it should be worth more than Verizon.

6:02 pm: Is Apple a friend, foe or both?

Friend, said de la Vega.

Skype?

“I don’t see Skype as a threat,” Hesse said. “To us, a bit is a bit.”

Amazon?

Amazon is a friend, said Humm. “Our industry lives on coopetition.”

Google?

Mead: “A lot of people in this room are customers and suppliers and competitors. That’s the nature of our industry.”

Google is a friend and Mead thinks Google would say the same of Verizon. “We helped put Android on the map.”

6:07 pm: And … we’re out.

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AT&T Committing Another $250 Million to Its Education Program

Ina Fried — Mon, 19 Mar 2012 04:01:22 +0000

AT&T is announcing on Monday that it will spend $250 million over the next five years to expand its education effort. The program, known as Aspire, funds activities ranging from mentoring and internships to initiatives designed to reduce dropout rates.

AT&T CEO Pays $2 Million for T-Mobile Deal Debacle

John Paczkowski — Wed, 22 Feb 2012 13:00:48 +0000

AT&T’s failed takeover of T-Mobile cost the company dearly — $4.2 billion in breakup fees paid out in cash and spectrum rights.

Turns out it cost CEO Randall Stephenson, as well — $2.08 million in bonuses.

In a new filing with the SEC, AT&T’s board called Stephenson out for the collapse of what would have been a $39 billion merger between the nation’s second-largest and fourth-largest mobile phone operators.

“Although costs incurred in large merger transactions (such as T-Mobile) are to be excluded in calculating final performance attainment, the Committee determined to include the T-Mobile transaction costs in determining payouts for all outstanding executive officer performance share awards, resulting in reduced final award payouts for performance shares with a 2009-2011 performance period,” the board explained in the filing.

And then it took the scalpel to Stephenson’s incentive pay, slashing his short-term bonus to approximately $1,260,000 — a 25 percent cut — and his stock award to about $820,000 — a 6 percent reduction.

End result: A nasty $2 million pay cut that helped drop Stephenson’s total compensation for the year to $22 million, a 19 percent decline from the $27.3 million he received in 2010.

T-Mobile or Not, AT&T Sees Wireless Growth Ahead

Ina Fried — Thu, 26 Jan 2012 15:10:43 +0000

AT&T reported a big loss earlier on Thursday, thanks to the charge it had to take for the massive breakup fee owed T-Mobile once that deal fell apart.

However, the company predicted lots of good things to come for the year ahead, including continued growth in its smartphone business, driving a further 2 percent gain in monthly average revenue per user, as well as growth in the total number of customers.

As far as its LTE network plans, the company said it intends to at least double the number of people able to receive its service this year. AT&T’s LTE service is currently up and running in 26 cities, covering 74 million people.

The company also noted that it had a record year for mobile broadband sales.

Speaking on the call, CEO Randall Stephenson said he hoped that all of that good stuff wouldn’t get lost in the news about the breakup fee, or focus on iPhone sales. But, speaking of iPhone, Stephenson said he had to point out that AT&T remains ahead of its rivals on selling Apple’s smartphone.

“We outsold them in every single quarter,” he said.

Looking forward, Stephenson said to expect earnings per share to grow in the mid-single digits, even with no improvement in the economy.

“We’re going to continue to be very aggressive in growing our mobile broadband franchise,” he said.

The biggest issue for the company and the industry is the need for additional spectrum.

“This growth cannot continue without more spectrum,” Stephenson said, taking a bunch of shots at the Federal Communications Commission for its rejection of spectrum deals, as well as the lack of progress on auctions.

“Despite all the speeches from the FCC, we’re all still waiting,” he said. “It’s clearly time for Congress and the FCC to step up.”

The result, Stephenson said, is that AT&T has to resort to things like tiered pricing, higher prices and throttling its most demanding users. (Subtext: So if you don’t like your high bill, blame Washington.)

7:14 am: CFO John Stephens is reviewing things. A few notes: Churn did increase a bit, but postpaid revenue per user climbed as it has been, with its level $6 higher per month than any of its rivals.

7:16 am: 9.4 million smartphones sold in the quarter, nearly twice as many as in the third quarter, with smartphone customers now 57 percent of its postpaid subscriber base. iPhone helped a ton, but the company notes its Android sales were twice those of a year earlier.

7:20 am: The company expects service margins to improve in 2012 thanks to continued strong smartphone sales and the higher-priced data plans announced last week.

7:30 am: On to Q and A.

With T-Mobile, AT&T had hoped to grow its prepaid business, something the other carrier was good at. Stephenson said that the company doesn’t see growing that business in the next six months, but will look to do so once it frees up 3G spectrum by moving more traffic to LTE.

“When you are spectrum constrained you get very focused on the markets you want to pursue,” Stephenson said, noting that for AT&T that has been the high end of the market.

7:34 am: On spectrum, Stephenson noted that the company actually feels OK on its ability through the LTE transition. It’s after that point that AT&T feels it needs more bandwidth.

“Our biggest issue is understanding what we are allowed to do,” Stephenson said.

Stephenson said the company isn’t sure how potential deals will be evaluated and who it is allowed to do business with.

7:45 am: What about voice? Are you seeing a decline, especially among young people?

“Without a doubt,” Stephenson said. “It’s almost uncool to talk on the phone.”

7:53 am: More shots at D.C. Spectrum rules “so fluid you could drink through them with a straw.”

7:58 am: What about the Verizon deal with cable companies? Would you support it at FCC?

Stephenson: I don’t know. I think it will be interesting to see what the FCC does.

It appears to be a logical transition. I obviously will be watching very closely. We won’t be a participant in terms of comments, just watching as a very interested bystander.

If nothing else, Stephenson said it will offer another data point on what kinds of deals might be allowed.

8:00 am: We’re wrapping up.

Last question is on smartphone sales. Every time the company forecasts where it thinks smartphone sales might go, they go higher.

Last quarter, 80 percent of new sales to postpaid customers were smartphones. Smartphone customers also become an opportunity for selling other devices and services.

There’s also more opportunity for businesses to really take advantage of mobile services.

“I think we are very early in the cycle in terms of businesses,” he said.

And we’re done.

The Case AT&T Will Make to Congress for the T-Mobile Deal

Arik Hesseldahl — Tue, 10 May 2011 20:08:55 +0000

We’re just full of congressional hearings this week at All Things D. Hot on the heels of today’s hearings about privacy and location data we’ve got another bunch of Congress critters set to ask tough questions about whether or not AT&T’s $39 billion plan to acquire T-Mobile is a good thing–not just for AT&T but for wireless consumers.

The witness list for tomorrow’s hearing before the Senate Judiciary Committee includes AT&T CEO Randall Stephenson. His written testimony has already been released, so we know at least some of what he’s going to say. I’ve embedded it below for your perusal.

Stephenson cites the spectrum crisis that FCC Chairman Julius Genachowski has mentioned so many times in his speeches. AT&T is still fighting the perception that its network has been overwhelmed by data demand from the iPhone. That in mind, he says in his prepared remarks:

To meet the ever increasing demand by consumers, we have to find ways to get more capacity from existing spectrum. That is exactly what the combination of AT&T and T-Mobile will do. Our two companies have very complementary assets, which means that combining them will create much more service-enhancing network capacity–the equivalent of new spectrum–than the two companies could have done operating separately.

Then he goes on to tap another favorite issue of Genachowski’s: Bringing broadband Internet to rural communities where access isn’t as easy to get.

Many people and many communities today don’t have access to the full capabilities of the mobile Internet economy. With the scale, resources and synergies this transaction provides, we can and have committed to provide cutting-edge LTE mobile Internet service to more than 97 percent of the U.S. population–nearly 55 million more Americans than our pre-merger plans and millions more than any other provider has committed to serve.

Next he says nice things about unions, in particular the Communications Workers of America, reminding senators that the CWA as well as the AFL/CIO have endorsed the deal.

Meanwhile, it won’t be uncompetitive at all. In fact, while the number of wireless carriers in the U.S. market will decrease by one, consumer choice increases. How’s that work? I’ll let him tell you.

All T-Mobile customers will have the choice of retaining their existing rate plans or switching to an AT&T rate plan, and they will thus have more choices than before, including a state-of-the-art LTE service that T-Mobile had no clear path to offer on a standalone basis.

Also expected to testify: Sprint CEO Dan Hesse, Cellular South CEO Victor “Hu” Meena and also Gigi Sohn, the president of Public Knowledge and Larry Cohen, head of the Communication Workers of America. Tune in tomorrow, when I’ll be liveblogging the hearing. See you then.

Stephenson Testimony ATT T-Mobile 5.11.11

Mr. Smith Getting Company as ATT, T-Mobile, Sprint, Apple and Google All Head to Washington

Ina Fried — Fri, 06 May 2011 12:00:53 +0000

There will be no shortage of tech companies speaking in Washington next week, as separate Senate subcommittees hold hearings on two major issues in the tech industry.

On Wednesday, four cellular company CEOs are set to testify before a Senate Judiciary subcommittee at a hearing looking into AT&T’s proposed $39 billion acquisition of T-Mobile USA. A day earlier, Apple and Google are set to appear before a different subcommittee to explore issues related to privacy and location-based information.

According to a witness list released on Thursday, AT&T CEO Randall Stephenson, T-Mobile USA CEO Philipp Humm, Sprint CEO Dan Hesse and Cellular South CEO Victor “Hu” Meena are all scheduled to testify at Wednesday’s hearing of the Subcommittee on Antitrust, Competition Policy and Consumer Rights. Also on the list are Gigi Sohn, the president of Public Knowledge and Larry Cohen, head of the Communication Workers of America.

And, if AT&T and T-Mobile needed any more hint that this would not be a friendly audience, they need look no further than the hearing’s title: “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?”

And that’s not the only big tech hearing on Capitol Hill next week. On Tuesday, representatives of Apple and Google are scheduled to appear before the Judiciary’s Subcommittee on Privacy, Technology and the Law at a hearing about location-based data practices

The hearing comes in the wake of concerns over how both companies are handling location-based information gathered on cell phones and tablets. CEO Steve Jobs told Mobilized in an interview last week that Apple would be testifying before Congress.

“They have asked us to come and we will honor their request, of course,” Jobs said. Apple has maintained that it isn’t tracking anyone and that location data found on the iPhone was the relevant portion of a broad, crowdsourced location database. Apple has since released an update to the iPhone operating system that limits the amount of such information stored on the device and ensured that all data is deleted when users opt not to use location-based services.

Google has also defended its handling of information, arguing that the information it collects is necessary to provide location-based services.

AT&T Chief Sees Divestitures in T-Mobile Deal

Roger Cheng — Wed, 30 Mar 2011 17:10:37 +0000

AT&T Inc. Chief Executive Randall Stephenson said he expects some divestiture of customers and wireless spectrum as the company marches through the approval process to close its acquisition of T-Mobile USA.

“We anticipate there will be some markets we will have to divest,” Mr. Stephenson said in an interview.

AT&T’s proposed plan to buy T-Mobile from Deutsche Telekom AG for $39 billion is expected to face heavy scrutiny from regulators and opposition from consumer-advocacy groups and competitors. Rivals Sprint Nextel Corp. and Clearwire Corp. have already been vocal about the harmful impact from the deal.

Read the rest of this post on the original site »

ATT Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness

Ina Fried — Mon, 21 Mar 2011 11:55:59 +0000

A day after AT&T’s surprise $39 billion deal to buy T-Mobile was announced, the company made its case to investors, regulators and the media on why the deal should go through.

The company positioned the deal as key to ensuring the U.S. stays competitive, saying that the country needs ubiquitous wireless broadband and has limited spectrum to get there.

As expected, there was also a lot of talk on how the deal will improve call quality and and about AT&T’s history of successfully digesting large acquisitions.

Also, check out our coverage from yesterday, including an interview with AT&T’s Ralph De La Vega, objections from Sprint and what AT&T will owe T-Mobile if regulators squelch the deal.

Live Blog

4:48 am: Mobilized is hoping that the government requires better hold music on all conference calls as a condition of allowing the deal to go through, should it allow the purchase. (Actually, the music today isn’t so bad as far as these things go. Mobilized just isn’t a morning person.)

4:56 am: AT&T clearly has its regulatory work set out for itself, with Sprint urging close scrutiny and at least a few lawmakers already calling for an inquiry.

4:57 am: Meanwhile, Business Insider notes that Sprint’s shares are taking a beating in pre-market trading, trading off around 12 percent.

Deutsche Telekom, T-Mobile USA’s owner, surged as investors cheered its strategy to unload the troubled North American carrier.

5:02 am: We’ve just been warned to silence cell phones and electronic devices. I’d love too, but of course, the cell phone is the very thing dialed in to the call.

5:05 am: Call now getting underway. AT&T chief executive officer Randall Stephenson is set to speak first.

“What I want to do over the next hour…” Well, there you go. That’s how long this will go.

Transaction represents a “unique opportunity,” Stephenson says, promising the deal will improve quality, enhance the spread of LTE and reward investors.

5:07 am: Stephenson positions deal as essential to protecting America’s leadership, saying that wireless broadband is key to national competitiveness.

He also points out that AT&T is the only major carrier that has a union workforce.

5:09 am: Now he is talking LTE, making the case that the merger will allow AT&T to spread the next-generation network further.

“As for the regulatory process, we’re very respectful,” Stephenson said. But, he said, now is the time for the deal.

“We can’t afford to wait.”

5:11 am: Capacity needs have grown and will grow another 8-10 times in the coming years, Stephenson said, pointing to growth of tablets, mobile video and other services.

“Every time we have increased speeds, usage has jumped,” Stephenson said.

5:13 am: Stephenson handing things over to the company’s general counsel to talk about the regulatory process.

5:14 am: Company is “very confident” it can achieve regulatory approval, the top lawyer says. He notes history of past mergers.

“We studied the law, we studied the facts,” he says.

Says company did its own rigorous internal review, expects regulators to do their own.

5:15 am: Says FCC will look at whether deal is in the public interest, while the DOJ will look at whether it benefits competition.

“We are confident we can meet these standards.”

5:16 am: General counsel notes spectrum challenges and the fact that T-Mobile had no clear path to a next-generation network on its own.

He also makes the “benefits U.S. competitiveness” argument. Sounds like this deal is being wrapped in the flag. “An American company investing billions of dollars in America,” he says.

5:19 am: On the competitiveness front, AT&T is touting not only competition from Sprint and Verizon, but also from prepaid and smaller competitors such as Leap Wireless and Metro PCS.

“These aggressive competitors are not sitting still,” AT&T’s top lawyer said.

AT&T’s general counsel Wayne Watts is wrapping up. Says expects thorough review and some conditions, but sees deal being approved after market-by-market analysis.

5:22 am: On to head of AT&T’s business solutions unit, who is outlining why wireless broadband is so critical to American industry.

5:23 am: Meanwhile, Sprint thought now would be a good time to introduce its Nexus S 4G phone and plans to bring Google Voice to all its CDMA phones. Mobilized will get to that in a sec, Sprint. We’re a little busy here.

5:25 am: Don’t like your cell service today? Well, this transaction is for you. Greater cell density and other benefits will improve service, exec promises.

5:28 am: Integration plan. First, combine companies’ 2G and 3G networks. Identify which cell sites to keep, make them dual-band to support T-Mobile and AT&T’s separate frequencies.

Second step will be to rationalize spectrum owned by two companies, which should free up spectrum for LTE.

5:31 am: Exec speaking now is John Stankey, head of business solutions unit, FYI.

5:33 am: Next up, Ralph De La Vega, president and CEO of AT&T Mobility and Consumer Markets. He notes that he personally has a lot of experience, having led deal 7 years ago between Cingular and AT&T Wireless.

5:34 am: Interesting balance between touting deal for investors and not spooking regulators and the public.

De La Vega did talk about higher ARPU–that’s average revenue per user. Investors like higher ARPU, but consumers have another term for it–higher prices.

5:38 am: Interesting point–”Retail store rationalization.” Just figured out another party that won’t like this deal: Mall owners.

5:39 am: On to CFO Richard Lindner, who is outlining some financial details.

There is a collar on AT&T’s share price, as well as further limit that Deutsche Telekom’s ownership in AT&T won’t drop below 5 percent.

Lindner reiterates company hopes to close deal in 12 months and will work with regulators promptly to try to reach that goal.

5:42 am: Back to touting investor benefits, such as higher margins and revenue over the long haul.

Again, this will be a fascinating balance for the company to strike as it tries to sell investors and regulators on the deal at the same time.

5:43 am: Expect $7 billion in integration expense and $2 billion in capital expenses, but will be offset as starting in third year of deal AT&T expects $3 billion per year in efficiencies.

5:45 am: Modest dilution over the first three years, Lindner said, with deal accretive after that, Lindner said.

5:47 am: Synergies in this deal should be even more than in Cingular-AT&T Wireless deal of seven years ago.

“We’ve done this before so we are confident in our ability to execute,” Lindner promises.

5:47 am: While dividends are up to the board, Lindner said there should be enough cash flow for merged company to continue dividend.

End of formal remarks and on to Q and A.

5:52 am: Company asked about change to companies’ plans before deal closes.

No change, AT&T says. LTE roll-out will continue as planned ahead of deal closing. However, companies will continue to be competitors.

5:53 am: Asked if they had a chance to pre-vet the deal with regulators, AT&T says no.

Has given heads-up calls and started dialogue, it says.

5:53 am: Asked what concessions it might be willing to offer, such as willingness to accept price caps or other consumer assurances.

AT&T says deal not just about going from 4 to 3 carriers, says regulators will look at local markets which are actually more competitive with regional carriers.

“That’s where you find lots of competitors,” Stephenson said.

“There will continue to be enormous competition.”

Says will have detailed conversations with staff at regulators, but too early for specifics on possible concessions. “I cannot now predict what other issues may arise.”

5:58 am: AT&T says it doesn’t plan to drop previously announced deal to acquire former MediaFlo spectrum from Qualcomm for nearly $2 billion.

“We want that spectrum. We need that spectrum.”

6:00 am: Also interesting: No T-Mobile presence on the conference call. Just AT&T talking about the deal.

6:04 am: Asked whether AT&T thinks it may have to shed subscribers on the order of 15 percent, as Verizon was forced to as condition of Alltel acquisition, Stephenson said his expectation is that no divestitures should be required. But, he said, “I don’t even want to get into that right now.”

6:10 am: Last question. On network synergies and capital spending relative to “uneven performance” of network in recent years. (I think that is a subtle reference to all the dropped calls and other complaints)

There’s a lot of variables more than just capital spending, AT&T said.

With that, the call ends with a final wrap-up from AT&T placing the flag back around the deal.

More Coverage

AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness

The AT&Terminator: Rise of Ma Bell

Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market

First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel

What AT&T Owes T-Mobile if Deal Doesn’t Go Through

T-Mobile USA: No, We’re Not Getting the iPhone Yet

T-Mobile’s Memo to Staff on the AT&T Deal

AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare

T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!

AT&T Agrees to Acquire T-Mobile USA for $39 Billion

Just in Time for the Weekend, ATT and RIM Announce Executive Departures

Ina Fried — Fri, 04 Mar 2011 22:05:25 +0000

Both AT&T and Research In Motion decided to choose Friday afternoon to announce shifts in their respective executive ranks.

AT&T announced late Friday that CFO Rick Lindner, a 19-year company vet will retire as of June 1, to be replaced by Controller John Stephens. Meanwhile, Research In Motion said that its chief marketing officer, Keith Pardy (seen here), is leaving the company for personal reasons. Although the departure wasn’t announced until Friday, Pardy let the company know of his plans a month ago, according to a person familiar with the situation.

RIM did not immediately comment on any succession plans. However, as noted by the Wall Street Journal, the move does come as the company prepares for a major transition including the launch of its PlayBook tablet and a shift to a new QNX-based operating system.

As for AT&T’s shift, the company said it expected little change with the move. “Rick is a world-class CFO who has done a remarkable job of positioning AT&T as one of the most financially strong companies in telecom,” CEO Randall Stephenson said in a statement. “Rick and John have worked together closely for more than 15 years, and we expect a seamless transition.”

And Since We Still Don’t Allow iPhone Tethering, We Can Guarantee That Wi-Fi-Only iPads Won’t Overload Our 3G Network

John Paczkowski — Wed, 03 Mar 2010 15:10:42 +0000

Here’s the real reason AT&T was able to offer such a breakthrough price on data plans for Apple’s iPad in the U.S.: The carrier doesn’t expect many people to buy them.

Though $14.99 per month for 250MB of data and $30 per month for unlimited data are bargains, particularly considering that 3G service for laptops costs an average of $60 a month, AT&T (T) doesn’t see many people taking advantage of them.

During an appearance at the Morgan Stanley (MS) conference in San Francisco Tuesday, AT&T CEO Randall Stephenson said he doesn’t expect Apple’s (AAPL) iPad to generate a lot of new 3G service subscriptions for the carrier.

“It will be interesting to see customer reaction to the iPad,” Stephenson said. “My expectation is that there’s not going to be a lot of people out there looking for another subscription. We think it’s going to be a largely WiFi-driven product.”

That seems like an odd remark from the CEO of a company that’s got the exclusive on iPad 3G connectivity in the U.S. Honest, though. The consensus among analysts seems to be that most folks in the market for an iPad will buy the Wi-Fi-only version. At $499-$699, the iPad is a real head-turner and relatively easy on the wallet. But at $629-$829, it becomes more of a “Do I really need this thing?” question.

One last point worth noting here: Asked about the fate of the company’s iPhone-exclusivity deal with Apple, Stephenson said he expects the iPhone to be a staple of AT&T’s business for “quite some time.”

AT&T Activates 3.1 Million iPhones in Q4

John Paczkowski — Thu, 28 Jan 2010 14:28:21 +0000

Widespread criticism of AT&T’s network performance hasn’t had much impact on the company’s financials. Reporting fourth-quarter earnings this morning, the carrier posted a 26 percent increase in profit, fueled by solid growth from the wireless business for which it is so often lambasted. Wireless service revenue rose 9.2 percent, and the company added 2.7 million net subscribers.

Earnings rose to $3.01 billion, or 51 cents a share, from $2.4 billion, or 41 cents a share, a year earlier. Revenue was $30.86 billion. Earnings per share and revenue both met analysts’ expectations. (Click summary below to enlarge.)

AT&T (T) activated 3.1 million Apple (AAPL) iPhones in the fourth quarter, one third for new customers.

“We had a solid 2009 and led the industry in the biggest growth driver–mobile broadband,” AT&T CEO Randall Stephenson said in a statement. Looking ahead, he added, “Our fundamental outlook for the business is quite positive.”

Yahoo Can Relax a Little (But Just a Little)–This Year's BoomTown Obsession Might Have to Be AT&T

Kara Swisher — Mon, 04 Jan 2010 15:03:09 +0000

Of all the major issues to think about in the digital sector over the next year, perhaps the most important to focus on will be the mobile space.

That’s why the swirl of controversy around the inability of AT&T (T) to maintain a reliable network for users of the Apple (AAPL) iPhone–especially in New York and San Francisco–is perhaps the flashpoint story of the coming year.

It’s not only an appalling predicament for consumers who have paid for promised service and been denied it, as well as a future Harvard Business School case study in corporate incompetence (or malfeasance, depending on your mood), it is a really bad development for tech in general.

In other words, failed calls and glitchy apps are more than just annoying–they’re holding back a key spark of future innovation for computing.

Unfortunately, this kind of thing happens way too much in the digital space.

In fact, this AT&T debacle actually reminds me a lot of AOL’s busy-signal crisis of 1997, when the then-high-flying online service signed up too many consumers for its all-you-can-eat access and did not have the equipment in place to deliver what it sold.

At the time, AOL CEO Steve Case used the same lame excuses as AT&T, pretty much asking users to buck up during the shortfall. But he quickly retreated, apologized and fixed the situation.

That particular self-inflicted mess is now but a distant memory and certainly did not stop the progress of either AOL or Internet use overall. But it was a stark reminder that the relentless march of innovation should not be throttled.

That’s truer than ever as computing moves into what I consider an entirely new era of development, all centered on portable “smart” devices, whose standard-bearer is the iPhone, iPod touch and–soon–iSlate.

That’s purely my opinion, of course (hey, Scoble, Web 3.0 is still mobile!)

But, as Walt Mossberg and I wrote before our seventh D: All Things Digital conference last summer:

“So what’s the seminal development that’s ushering in the era of Web 3.0? It’s the real arrival, after years of false predictions, of the thin client, running clean, simple software, against cloud-based data and services. The poster children for this new era have been the Apple iPhone and iPod touch, which have sold 37 million units in less than two years and attracted 35,000 apps and one billion app downloads in just nine months.”

This means there’s plenty of need for strong networks that can handle all the wireless data that are going to be pumped through them in ever-increasing amounts.

Perhaps this looks like a bandwidth hogfest by customers, but it’s the landscape now and AT&T must adapt or, well, you know.

So, following in the footsteps of a lot of really terrific work done pretty much by bloggers on the mess AT&T has created, it is probably a given that–as I have obsessively done with Yahoo (YHOO) and its management woes–other journalists and I should stop making jokes about it and spend a lot more time monitoring what the telecom giant and others are doing or, really, not doing.

As usual, all tips and delicious memos appreciated, as well as suggestions of stories to look into.

Until then, here’s a short and mostly silly video I did recently of some dropped calls I had on my iPhone, as well as an interview Walt did with AT&T President, CEO and Chairman Randall Stephenson at D7 last summer about these very issues:

[ See post to watch video ]

AT&T Activates Record 3.2 Million iPhones in Q3

John Paczkowski — Thu, 22 Oct 2009 12:05:21 +0000

How badly does AT&T want to renew its iPhone exclusivity contract with Apple?

Pretty damn badly.

Posting third-quarter earnings that topped Wall Street expectations this morning, AT&T (T) said it activated a record 3.2 million iPhones during the period (not surprising given Apple’s blowout quarter).

Of those, 40 percent were for customers new to the carrier. That’s quite a bit more than Wall Street expected, and this surge did much to balance continued weakness in AT&T’s wireline business (click on slide below to enlarge). In fact, if that 40 percent metric is accurate, then Apple’s (AAPL) iPhone single-handedly generated an astonishing 92 percent of AT&T’s post-paid subscriber growth.

“We delivered a terrific wireless quarter, IP data growth was strong and execution across the business continues to be solid,” AT&T CEO Randall Stephenson said in an earnings release, and indeed, that would seem to be the case.

Wireless data-services revenue spiked 34 percent. And revenue from the wireless segment overall increased 8.2 percent as profit grew 41 percent. Wireless turnover rate fell to a record low of 1.4 percent.

Meanwhile, wireline revenue fell 7.1 percent, profit 30 percent.

So in the end, AT&T posted earnings of $3.2 billion, or 54 cents a share, down from $3.23 billion, or 55 cents a share, a year earlier. Revenue slipped 1.6 percent to $30.86 billion. Analysts polled by Thomson Reuters expected per-share earnings of 50 cents on revenue of $30.88 billion.

At $26.86, shares of AT&T are up about 3.5 percent in early morning trading.

AT&T Activates Record 3.2 Million iPhones in Q3

John Paczkowski — Thu, 22 Oct 2009 12:05:21 +0000

How badly does AT&T want to renew its iPhone exclusivity contract with Apple?

Pretty damn badly.

Meanwhile, wireline revenue fell 7.1 percent, profit 30 percent.

At $26.86, shares of AT&T are up about 3.5 percent in early morning trading.

iPhone Owners Would Like to Replace Battery, AT&T

John Paczkowski — Fri, 21 Aug 2009 21:11:08 +0000

According to a new survey from ChangeWave, owners of Apple’s new iPhone 3GS are quite happy with the device. Sadly, the same cannot be said of the AT&T service that accompanies it. Asked what they dislike most about the iPhone, 41 percent of respondents said the device’s short battery life.

Nearly a third, 32 percent, said AT&T.

And another 23 percent said the quality, coverage and speed of AT&T’s network. (Click image below to enlarge.)

Now, that isn’t all that surprising given the swell of bad press that occurred when AT&T admitted at Macworld 2009 that unlike dozens of other carriers that it wasn’t ready to support iPhone tethering or MMS support. But it’s interesting that AT&T (T) is responsible for two of the top three complaints about an Apple (AAPL) product. I can’t imagine that’s going over too well in Cupertino.

Says ChangeWave: “There are no indications that Apple’s AT&T problem is going away. On the contrary, the better customers feel about their iPhones the worse they feel about AT&T–with nearly one-in-two 3GS owners citing AT&T-related issues as their biggest dislike. These survey results suggest Apple will be forced to deal with the issue sooner than many analysts expect.”

“There will be a day when we are not exclusive with the iPhone,” AT&T CEO Randall Stephenson said recently. And apparently, iPhone users are hoping that day comes sooner rather than later.

iPhone Owners Would Like to Replace Battery, AT&T

John Paczkowski — Fri, 21 Aug 2009 21:11:08 +0000

Nearly a third, 32 percent, said AT&T.

And another 23 percent said the quality, coverage and speed of AT&T’s network. (Click image below to enlarge.)

“There will be a day when we are not exclusive with the iPhone,” AT&T CEO Randall Stephenson said recently. And apparently, iPhone users are hoping that day comes sooner rather than later.

QOTD

John Paczkowski — Fri, 24 Jul 2009 10:00:30 +0000

“There will be a day when we are not exclusive with the iPhone.”

– AT&T CEO Randall Stephenson

AT&T Chairman, CEO and President Randall Stephenson: The Full D7 Session

Kara Swisher — Wed, 10 Jun 2009 18:13:07 +0000

Next up on the seventh D: All Things Digital conference program, Walt Mossberg interviewed AT&T (T) Chairman, CEO and President Randall Stephenson.

[ See post to watch video ]

AT&T Chairman, CEO and President Randall Stephenson: The Full D7 Interview

Kara Swisher — Wed, 10 Jun 2009 16:03:45 +0000

Next up on the seventh D: All Things Digital conference program was an onstage interview that Walt Mossberg did with AT&T (T) Chairman, CEO and President Randall Stephenson.

In the interview, Stephenson was queried about a lot of topics, including the status of the Apple (AAPL) iPhone deal, the company’s network glitches, the economy and competitors like the new Pre from Palm (PALM), and more.

Here’s the video of the entire session:

[ See post to watch video ]

You can find all of our conference coverage on the D7 Highlights page.

Twitter's a Big Baby! Apple iPhone's AT&T Problem! MySpace's Blues! No One's Gonna Pay for This Blog! Poll-Crazy at D7

Kara Swisher — Fri, 05 Jun 2009 17:48:06 +0000

Hey, politicians aren’t the only ones who get to do fancy polls!

Walt and I had a bunch of them about a variety of tech topics that we pulled out to ambush, ooops, pose to speakers at our seventh D: All Things Digital conference last week.

For the D7, we commissioned a study of digital trends from Penn, Schoen & Berland Associates (PSB), a global market research and consulting company and a conference production partner.

PSB conducted 1,005 interviews within the general U.S. population–you know, real people who are not geeked out.

One showed–despite Silicon Valley hype–how Twitter was still in its infancy, in awareness, engagement and size, which we got Co-founders Biz Stone and Evan Williams to react to onstage. (They could care less.)

Another showed that the biggest problem that users of the Apple (AAPL) iPhone cited was the poor AT&T (T) network. (Sorry, Randall Stephenson!)

Another looked at the declines in usage of the MySpace social networking site, which we know its new CEO Owen Van Natta enjoyed reacting to in front of the crowd. (Okay, he did not enjoy it.)

Also, no one is paying for subscriptions to blogs, which the Huffington Post impresario Arianna Huffington said was okay, since consumers will only fork over money for “very weird porn.” (Yes, she said that!)

In any case, here is a selection of slides that were shown and discussed during various speaker sessions.

Click on any slide below to enlarge, then hit “next” or “previous” on either side of the slides to page through.

D7: The Conference in Quotes

John Paczkowski — Fri, 29 May 2009 07:00:45 +0000

Like last year’s D6 conference, this year’s D7 has had its share of memorable lines. A selection of some of the better ones below:

“He drew arrows everywhere. It looked like a Dilbert cartoon.”

– Yahoo CEO Carol Bartz on the org chart that company co-founder Jerry Yang drew for her while wooing her for the CEO job

“Unless you are selling porn, and weird porn, it’s not worth going the subscription route.”

– Arianna Huffington, Editor-in-Chief of the Huffington Post

“There’s always going to be someone trying to rush the fat kid to the head of the buffet.”

– Mark Cuban on a potential bandwidth crisis

“We should have named it ‘BOOM!’”

– Microsoft CEO Steve Ballmer suggests an alternative Steve Jobs-esque name for Bing

“The Pre eats iPhones for breakfast.”

– Roger McNamee jokes about the Pre’s prowess

“People in the music industry, we’ve had a horrible record of shooting ourselves in the head.”

– Ticketmaster Entertainment CEO Irving Azoff states the obvious

“I’ve always said that if we described Twitter in three sentences, the first two would be about not putting too much fidelity on it, and the last sentence would be ‘we don’t know.’”

– Twitter co-founder Biz Stone

“You can’t take nine women and make a baby in the month; there is a process.”

– Yahoo CEO Carol Bartz

“Down 15 percent is the new flat. I mean, isn’t it? C’mon.”

– Yahoo CEO Carol Bartz on the econalypse

“It is a product that has changed the face of wireless communications.”

– AT&T CEO Randall Stephenson makes obeisance to the Apple iPhone

“Would I like to see the [Palm] Pre on our network some day? Of course I would.”

– AT&T CEO Randall Stephenson

“Do you want me to say something naughty now?”

– Yahoo CEO Carol Bartz to Kara Swisher

“Are you leading up to ‘I’m too old and too stupid to know what the Internet is?’ Cause by the way, Walt is 61 and I’m only 60. So… f— you.”

– Yahoo CEO Carol Bartz brings down the house with the f-bomb

“They’d have to have big boatloads of money.”

– Yahoo CEO Carol Bartz names Yahoo’s selling price to Microsoft

“I don’t see the benefits of a tablet over a notebook.”

– RIM CEO Mike Lazaridis

“That was pretty cool.”

– Walt Mossberg reviews the unreleased Nokia N97 from the D7 stage

“The people who fired you [from AOL] were later fired, so that must feel great.”

– Kara Swisher to Jon Miller, chief digital officer of News Corp.

“I’m sorry we’re starting late. Carol Bartz just trashed my hotel room.”

– Kara Swisher

“I wouldn’t have bought it.”

– Mark Cuban on YouTube

“‘First come the innovators, then come the imitators, then come the idiots.’ That’s where we are on the Internet.”

– Mark Cuban quotes Warren Buffet

“We just want everyone to get along.”

– Twitter co-founder Evan Williams on claims that the company will someday kill Google

“When someone in the government wants you, it’s not a good place to be. You don’t want to be someone’s skin on the wall.”

– Mark Cuban on his legal problems

“So what have you been up to besides dancing and fighting the government?”

– Kara Swisher to Mark Cuban

“We need companies to say, ‘this matters.’”

– Activist Eve Ensler calls for rape-free cell phones

“We like to call them minicomputers.”

– Nokia CEO Olli-Pekka Kallasvuo renames the smartphone

“The discussion we need to have is about saving journalism, not saving newspapers.”

– Arianna Huffington, Editor-in-Chief of the Huffington Post

“You are so lucky I wasn’t born in this country!”

– Arianna Huffington, on running for president

“We’d like to be the most-watched TV network. We don’t have to be.”

– NBC Universal CEO Jeff Zucker on ratings

“If you were a business picking a space in which to compete, you wouldn’t pick one with Microsoft, Apple and Google.”

– Mozilla chairman Mitchell Baker

“Steve,

Forget it

Won’t help

Ha

Carol”

– Yahoo CEO Carol Bartz‘s note to Microsoft CEO Steve Ballmer

“It’s aimed at women.”

– Roger McNamee on the Palm Pre’s mirror

“I worked with Steve for many years and learned a tremendous amount from him, the value of user experience and design–taste. I also learned the idea of great marketing.”

– Apple alum and Pre-designer Jon Rubinstein on Steve Jobs

“Most people think of the browser as a pane of glass, they don’t realize that it really effects the way they see the Web.”

– Mozilla CEO John Lilly

“Encarta is an encyclopedia…that is not getting much ongoing investment.”

– Microsoft CEO Steve Ballmer on the now-defunct Encarta

“It’s not hard, I’ve been watching ‘Green Acres’ for years.”

– Kara Swisher on her imitation of Arianna Huffington’s accent

“You’re now where Google’s “don’t-be-evil” bulldozer is heading.”

– Walt Mossberg to Mozilla execs John Lilly and Mitchell Baker

“I like Chrome.”

– Mozilla CEO John Lilly reviews Google’s new browser

AT&T's Pre Envy

John Paczkowski — Thu, 28 May 2009 03:07:32 +0000

AT&T (T) is very happy to be the exclusive carrier of the Apple (AAPL) iPhone in the states, but it wouldn’t mind selling the Palm (PALM) Pre too. Asked at the D7 conference today if he might like to add the forthcoming device to AT&T’s handset lineup, AT&T CEO Randall Stephenson said he would, but Palm’s exclusive deal with Sprint (S) prevents that. “Would I like to see the Pre on our network some day? Of course I would,” he said. “Obviously we talk to all the handset manufacturers. We want a broad selection of devices in the lineup. That’s important. Devices right now are what’s driving the customer adoption as much as anything.”

D7 Video: AT&T CEO Randall Stephenson Onstage With Walt Mossberg

Beth Callaghan — Wed, 27 May 2009 15:27:08 +0000

Walt Mossberg jumped into his discussion with Randall Stephenson by citing poll data showing that some folks might not be interested in buying an Apple (AAPL) iPhone simply because they want to avoid AT&T (T). Stephenson notes that AT&T is improving network quality and reducing churn, and in an informal poll of the audience, a surprising number of of D7 conference-goers indicate they’re satisfied with AT&T service.

[ See post to watch video ]

AT&T CEO Randall Stephenson: "Wireless Is the Priority of This Business"

John Paczkowski — Wed, 27 May 2009 15:17:09 +0000

Randall Stephenson is just two years into his tenure as CEO of AT&T (T) but he faces challenges that have been decades in the making. Among them: remaking AT&T amid the steady decline of its landline business, future-proofing its business as our appetites for bandwidth grow, competing with the likes of Comcast (CMCSA) in the cable TV market and fending off the proponents of Net neutrality, who don’t care much for the idea of a two-tiered Internet.

Beyond this there is the issue of continuing to build out AT&T’s wireless business, which–if not iPhone-dependent–is certainly nursing a hell of a habit. In its fourth-quarter AT&T added 2.1 million wireless subscribers. 1.9 million of them were iPhone accounts. Astonishing. But AT&T’s exclusive deal to peddle the Apple iPhone in the U.S. expires next year. The company is obviously eager for an extension. But what is it willing to do to get it?

Incidentally, we had a fairly big announcement from AT&T this morning. The company said it is upgrading to High Speed Packet Access 7.2 technology. That means considerably faster mobile broadband speeds. The upgrade is slated to begin later this year, with completion expected in 2011.

Session Highlights

[ See post to watch video ]

Live Blog

After some brief introductory remarks from Wall Street Journal Managing Editor Robert Thomson, who jokes about implementing an 18-second delay for expletive-fond Yahoo CEO Carol Bartz, and a welcome song from Jill Sobule, Walt welcomes Randall Stephenson to the stage and the second day of D7 begins.
For a first question, Walt, referring to poll data, asks Stephenson why some folks might not be interested in buying an Apple iPhone because of AT&T. Stephenson notes that AT&T is improving network quality and reducing churn.
Walt says he gets frequent reader mail complaining about AT&T service coverage. Stephenson says the company is way down the road in terms of the level of data traffic on the networks. Behavior changes radically. He says AT&T is a year ahead of other carriers in terms of network management, managing the volume and behavioral changes from adoption of new devices.
Walt: Let’s talk for a moment about the iPhone. It’s a data-intensive device. You weren’t ready when you first launched the iPhone 3G. What happened? Stephenson says the company wasn’t quite ready. “But we’re improving.”
Walt asks the audience how many people use AT&T. Many hands raised. How many had it before the iPhone? A fair bit. How many are satisfied with the service? Also a fair bit. Clearly, AT&T’s service must be getting better.
The level of data volumes we are seeing on our networks is changing customer behavior dramatically, says Stephenson. This is challenging, but the company is addressing it.

Walt: If we project out farther past the iPhone, are the mobile networks we have going to be able to handle these new data-intensive devices? Stephenson: The answer is clearly no. That’s why we’re buying more spectrum and moving toward LTE. What’s so good about LTE? Speed levels of 20 megs plus, for one, says Stephenson, who admits that real-world performance will be somewhat less than that.
Stephenson says AT&T is more than doubling the theoretical speed of the network. Does this mean the speed of our handsets will also double, asks Walt. Not on current handsets. But on future ones, which will all be backward-compatible.
When you upgrade the network to 7.2 will it have any negative impact on the network as data demands grow, asks Walt. Stephenson says no. “It’s all network management….We’ll have a whole new capacity.”
Walt: In a world where both you and Verizon (VZ) go to LTE, will I be able to take my handset and switch to Verizon’s network? Stephenson says the LTE standard is consistent and should permit that.
The conversation shifts to Wi-Fi. Walt asks about AT&T’s Wayport efforts. “When we look at the world today and the world of the future, the fixed-line bandwidth requirements are not slowing. Then you move to the wireless broadband world, where bandwidth requirements are not slowing either. You need a bridge between the two.” That bridge is WiFi, adds Stephenson, noting that the company sees extraordinary WiFi usage among it smartphone users.
Stephenson talks for a moment about automatic authentication and says AT&T is working to implement it. “The current system is kludgey. People want it seamless.”
Walt asks about the company’s broadband business. Stephenson says it’s doing well. Notes that it is doing nearly as well as Verizon’s FIOS business.

Walt asks how the economy is affecting AT&T’s various businesses and the advance of the company’s capital spending plans. Stephenson says the board business has obviously been affected. Business is slowing especially in enterprise and the consumer phone business. Interestingly enough, people are more apt to disconnect the home phones than they are broadband. So AT&T continues to aggressively invest in mobile apps and in wireless infrastructure. He notes that the company is really pushing hard to build out its U-verse network. “I’ve been through a few of these recessions in my 20 years in this business, and it will turn. So you must continue to invest and prepare for the day when it does.”
What about competitors? What are they doing? In wireless, says Stephenson, competitors also investing. A lot of capital is coming into the wireless business. In broadband, cable guys have not slowed down. Telecom structurally in a good place. Regulatory structure continues to bring in capital.
Back to the issue of the iPhone. Was it worth it to sign the deal with Apple (AAPL)? How has it worked out? “It’s worked out terrific. We have no complaints.” He notes that the company incurred dilution, but has benefited by getting the premier customer in the space–one with high data usage and low churn. “I’m very pleased with the deal.”
Walt asks if the company has suffered from the iPhone’s fixed data charges. It’s not a variable charge. How does that offset the dilution that AT&T has to pay? We made a bet, says Stephenson, that the industry was heading toward smartphones, and that was a good bet. Now we’re seeing dramatic uptakes in usage, so the pricing model must change. And it will change. The market will dictate that change more than anything else. But right now the economics of the iPhone are very good for us.
Walt: Have you ever called Steve Jobs and just asked him to put a keyboard on the iPhone? Stephenson chuckles. No. “If Steve wants to put a keyboard on the iPhone, I’m sure he will.”
Walt: Are all these new operating systems arriving at market problematic for AT&T? The iPhone, Palm’s (PALM) WebOS, Android? Would it be easier if there were fewer platforms? Stephenson: Do I want to see fewer platforms? Yes, it’s better for my business. Will I see fewer platforms? I don’t think so. So we need to take advantage of it and use it as an opportunity.

What about the Palm Pre? “Would I like to see the Pre on our network some day? Of course I would,” says Stephenson. “We obviously talk to all the handset manufacturers. We want a broad selection of devices in the lineup. That’s important. Devices right now are what’s driving the customer adoption as much as anything.”
Stephenson says he’s seeing dramatic uptakes in data usage. Pricing models will change over time, he says. How it changes will depend who you are. He notes that costs are variable in wireless–every new bit has a direct cost tied to it, unlike wireline business. AT&T margins are 40 percent-plus in Q1 on wireless business.
Walt: Can you foresee a day when you’re not running retail stores? Why do you want to run stores when you’re really a network company? Stephenson says distribution is changing. But a retail presence is always going to very important, and I always want to have a part of that.
Moving on to the Q&A: How do you transform wireline customers into wireless and broadband customers? Integration is very important, says Stephenson. If you already have AT&T Wireless, it’s a natural step to add broadband and even wireline if it’s offered as a bundle.
Why can’t we have data roaming on LTE from the beginning and avoid the mistakes of the 3G networks? Stephenson says the LTE network will have similar roaming agreements as those on the current networks. “It’s in all our best interests.” The industry always evolves to a point where broader coverage is needed and these agreements become necessary. You’ll see that with LTE as well.
Question about SlingBox on 3G network being rejected: Who decided that? Stephenson says that terms of service agreement for the customer do not allow customers to move live stream video over the wireless platform. Not like the fixed line side. If you start congesting network with data, voice quality goes down. We have to maintain some quality, so it’s not allowed under terms of service.
Responding to a question on warrantlessly providing data about customers to the government, Stephenson says AT&T will act within the law in all regards to customer information and privacy. “We will comply with the law, absolutely,” he says.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.