What keeps AT&T CEO Randall Stephenson awake at night? Is it war? Poverty? The struggle over civil rights? Hunger? Income distribution inequality? An education system wracked with problems? A bifurcated society seemingly unable to find common cause with one another? Scary clowns armed with rusty, yet somehow razor-sharp knives?
If you guessed any of those things, you were wrong. No, what keeps Randall Stephenson awake at night is—[cue dramatic, yet threatening music]—APPLE’S iMESSAGES! [shriek of fright]
Oh, the horror!
Wait a second, what exactly is so worrisome about Apple’s iMessages? Ah, right. It’s a service that:
- Allows users to use the data they’re already paying for without paying for it a second way.
- It bypasses AT&T and allows iOS device owners, and now Mac users, to talk to each other without involving AT&T.
- For many people, it replaces some, if not all, of the messaging they do, which means they can cut dramatically back their messaging plans.
“You lie awake at night worrying about what is that which will disrupt your business model,” Mr. Stephenson said at the Milken Institute’s Global Conference late last week, according to The New York Times. “Apple iMessage is a classic example. If you’re using iMessage, you’re not using one of our messaging services, right? That’s disruptive to our messaging revenue stream.”
And he has a point, to be sure, though it’s one I have no empathy for. Text messaging is extraordinarily lucrative for carriers. They charge an arm and a leg, especially for heavy usage, even though it uses relatively few resources and very little data.
In January, Reuters noted that texting plans represented 12 percent of carrier revenue in the U.S., though more recent data shows that text messaging was down, while data use was up. iMessage might just play a role in pushing SMS services into the realm of reasonable.
So, by giving up control over that chokepoint, AT&T risks having its business disrupted, something that Apple is pretty good at doing. It’s a real concern for any communication mogul.
On the other hand, and in a word, duh. Mr. Stephenson is a very smart chap. What did he think would happen if his company (and the other carriers) signed off on iMessage, allowing Apple to integrate its proprietary texting service with the carriers own SMS services.
So…you know, duh.
The genie was out of the bottle the moment any of the carriers allowed third parties to access the Internet and download apps without the carriers’ approval—it was only a matter of time before bending customers over a barrel with SMS rates became as quaint as selling things out of barrels.
The same thing is true for voice, too, though it will take longer, and maybe a minor paradigm shift or two along the way. At the very least, the carriers will soon be merely one of multiple ways to talk to other people on our smart devices in the seamless way we currently use traditional cellphones.
In other words, it’s only a matter of time before wireless carriers become primarily data providers, rather than cell phone providers. But that’s hardly a secret, and it just doesn’t seem like the kind of thing that should keep big-time carrier executives awake at night.
If they want to stay up all night, they should be thinking about ways to disrupt their industry, to change things so that they can stay relevant. Worrying about change is the reactionary approach. Dream about change instead, and you might change the world a little.
That’s all I’m saying.
There’s something else about the iPhone that had Mr. Stephenson wanting some afternoon nap time, and that’s the unlimited data plan the company no longer lets users get.
“My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat,” the executive said. “And it’s a variable cost model. Every additional megabyte you use in this network, I have to invest capital.”
And the people wept at the thought of all those megabytes.
One last interesting tidbit from this conference: Mr. Stephenson recounted the initial meetings with Apple back when AT&T was still known as Cingular, and he was chairman of Cingular. According to him, then Cingular CEO Stan Sigman approached the board of directors to explain how his company had been offered a “unique opportunity” in the form of Apple’s iPhone.
He said, “I remember asking the question: Are we investing in a business model, are we investing in a product or are we investing in Steve Jobs? The answer to the question was, you’re investing in Steve Jobs. Let’s go after this thing. And we went after it, and the rest is history.”
To that effect, he also made it clear that he has no regrets about taking on the iPhone. You know, other than introducing the device with unlimited data plans and losing sleep over iMessages.