AT&T the Sleeping Giant Awakens to blitzkrieg the VoIP market

August 10, 2004

So every industry pundit is claiming that AT&T has surrendered to the Baby Bells, but I know better.

Here are some headlines:
AT&T surrenders fight for home telephone services
AT&T Gives Up on Consumer Market
AT&T rings in a new business strategy

"AT&T last month said that it would stop promoting its local and long-distance services to consumers, marking the end of an era for the company that once served virtually every U.S. home. AT&T plans to focus exclusively on big business customers, which account for 75% of overall revenue. The strategy is expected to save AT&T about $1 billion annually.

Dorman's decision to walk — make that run — away from AT&T's legacy long-distance business, a bedrock of the company since its formation in 1885, grabbed headlines. It also caused chortling among the regional Bell phone companies."

I should mention that Verizon, is going after AT&T customers with full-page ads stating "Some phone companies don't think you're worth it. We do."

Do you remember when Microsoft did not realize the potential of the browser, letting Netscape have a huge lead before Microsoft finally realized their gaff, refocused, and then caught and surpassed Netscape. Well, many people believe that AT&T has repeated history by not seeing the huge potential for VoIP and by letting young VoIP upstarts like Vonage take slices of their pie.

I don't see it. I think AT&T knew all along that VoIP was going to happen sooner or later. They purposely did not launch a VoIP service until recently for a very good reason. Why would AT&T, a multi-billion dollar company want to help propogate VoIP and make it mainstream when they know it would reduce the average per-minute rate and hence reduce their margins?

It's so easy for us to want to believe that AT&T repeated Microsoft's huge mistake. After all, we enjoy watching the mighty fall and we enjoy watching an underdog win. But I don't think AT&T was taken off guard by VoIP as many would have you believe. Nope, I believe AT&T was just been planning and waiting for the right timing to launch their "VoIP attack".

So do I believe AT&T retreating and surrendering the consumer space as the aforementioned story links above claim? No friggin way. AT&T is going around the "back door" to offer local and long-distance to consumers using VoIP technology and thus avoiding the spaghetti of telecom regulations (unless FCC Chairman Michael Powell decides to regulate VoIP). Let me give you an AT&T quote: "As a result of recent changes in regulatory policy governing local telephone service, AT&T will no longer be competing for residential local and standalone long distance customers." AT&T was essentially getting pressured by rising wholesale prices it must pay for local telephone connections. It was no longer cost economical for AT&T to do business "the old way". So AT&T is taking a huge gamble (a multi-billion dollar gamble - boy I wish I had those kind of chips to play) on VoIP to cut on their costs and increase their margins.

Even if AT&T was surprised or taken aback by the explosion of VoIP, if I may borrow a quote, "I fear all we have done is to awaken a sleeping giant..." Have the VoIP players woken the sleeping AT&T giant? I'm afraid it may be so.

As proof that AT&T is going "full-out gang-busters attack mode" gunning for the VoIP market, I have a "scoop" that AT&T is launching a media blitz during the Olympics with three commercials evangelizing VoIP and promoting AT&T CallVantage, a broadband VoIP product that competes with the likes of Vonage, Packet8, Lingo, BroadCom, VoicePulse, etc. I was able to get some "pre-release copies" of the Olympic commercials in MPEG and Quicktime format.

You can download AT&T CallVantage's three commercials below, but before you download them, here are some quotes from the main Anthem commercial and my comments:

AT&T Anthem commercial quotes:

-"It's based on a new technology called VoIP" Yeah, it's really new. Uh, Internet Telephony Magazine has been around since 1998 (6 years). Ok, well maybe it's new to consumers, but VoIP is certainly not new. - "Your phones are getting rooted across the Internet." It's pronounced "routed" not "rooted", damn it! I hate it when people pronounce it that way! - "If you ever use the Internet you can use this." Well, they are making it seem easy for consumers to switch to VoIP, so this is a good marketing message. - "It's business tools simplified to the consumer" Ahhh, ok. Sounds like marketing-speak. - this is the reinvention of the telephone I'd agree with that. Some cool features are possible with VoIP that are not possible with traditional telephones.

Ok, here's the commercials since I know you will TiVo past them during the Olypics. Oh wait, I just blogged saying Tivo'ing sports doesn't make sense (who watches recorded sports?). Well anyway..

AT&T CallVantage - Anthem - Their main 60 sec marketing pitch to "brand" CallVantage.
AT&T CallVantage - Locate Me - Talks about how their service can locate you by calling multiple phones at once to try and reach you.
AT&T CallVantage - Do Not Disturb - Talks about how their service can detect different time-zones and then play a special message such as "It's 4 frickin clock in the morning, why are you calling us now. Call back later!" Well, the commercial says it in a nicer way, but you get the point.

Comments on AT&T's gamble?

Comments to AT&T the Sleeping Giant Awakens to blitzkrieg the VoIP market

Steve Brown :
August 19, 2004 4:00 PM

I have a couple rather petty complaints about AT&Ts ads....first off, don't they make some claim in the ad about 'creating' VoIP? Can they substantiate this? Second....why do people have to pronounce it 'voyp?' I realize this is a point hardly worth arguing....but as long as VoIP has been discussed around the company where I worked (and VoIP/telephony products sold by us), I've usually found that only sales people, marketing clowns, and non-knowledgable people used the 'voyp' pronunciation. (Similarly, I'm annoyed by prople that pronounce "GBIC" as "gibbick." Alas, perhaps I'm just too uptight about the whole situation.)

Tom Keating :
August 19, 2004 4:25 PM

Hey, I'm with you about the 'voyp' pronounciation. Very annoying. But saying it as the longer version - "Voice over IP" or "v-o-IP" probably would cost an extra $20,000 per time due to the extra syllables! : )

Hey, every syllable counts when you're talking about Olympics or Supebowl commercials!

Serene :
October 12, 2004 2:50 PM

The AT&T CallVantage service introduces a D-Link adapter into our broadband service. It sits behind the cable modem. It robs so much bandwidth, our internet connection came to a slow crawl. When we removed the D-Link (which means our phone would be dead), our internet becomes normal. After numerous tests, we are 100% sure the D-Link is definitely the culprit. The voice quality is no difference from it's analog sibling. I can't see traveling with my D-Link and plugging it into a network connection in my hotel room to convert my hotel room into my work space. Most motels offer free wireless network these days, there is no cable port to plug into! The hard cable connection usually cost upwards of $10 per day in most hotels. It's free to simply forward my home phone to my cell phone, I have plenty of minutes to burn on my cell plan. So I call to cancel. It took them only 4 days to switch me from AT&T local service to CallVantage, but it will take them 2 weeks to switch me back!

Serene :
October 12, 2004 2:53 PM

The AT&T CallVantage service introduces a D-Link adapter into our broadband service. It sits behind the cable modem. It robs so much bandwidth, our internet connection came to a slow crawl. When we removed the D-Link (which means our phone would be dead), our internet becomes normal. After numerous tests, we are 100% sure the D-Link is definitely the culprit. The voice quality is no difference from it's analog sibling. I can't see traveling with my D-Link and plugging it into a network connection in my hotel room to convert my hotel room into my work space. Most motels offer free wireless network these days, there is no cable port to plug into! The hard cable connection usually cost upwards of $10 per day in most hotels. It's free to simply forward my home phone to my cell phone, I have plenty of minutes to burn on my cell plan. So I call to cancel. It took them only 4 days to switch me from AT&T local service to CallVantage, but it will take them 2 weeks to switch me back!

Tom Keating :
October 12, 2004 3:09 PM

The bandwidth sucking problem is a known problem with the D-Link and AT&T. I believe AT&T is working on that issue.

As to not being able to take your TA/ATA with you on the road since motels/hotels have wireless and not "wired" connections, you have 2 choices.
1) use a softphone client if available (though some charge per minute - i.e. Vonage's softphone)
2) bring along a WiFi router with Ethernet ports. The WiFi router will pick up an IP address and you can then plug in your TA / ATA into it.

Anonymous :
January 20, 2005 9:34 PM

ATT call vantage service has been a nightmare. Allmost impossible to get somebody on line, and when ever, if you are lucky, after waiting on line for 40 minutes to one hours you get any body on line, they are not able to do any thing for you.

ec :
April 10, 2005 5:57 PM

Whatever you do, don't try to use the callvantage TA with a motorola, all in one wireless surfboard modem/router. The TA will not work right. I downgraded to a regular surfboard modem with belkin wireless router. I notice the decrease in speed. Next I will try to set up the modem behind the router to see if that works any better. I jerryrigged the previous set-up with a linksys router and the aforementioned wireless modem. It worked part time, but the speed was normal.

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