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Thread: How AT&T Makes Money

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    How AT&T Makes Money

    https://www.investopedia.com/insight...t-makes-money/

    For nearly a century, AT&T Inc. was one of the largest corporations not just of its kind, but in all of existence. It was as large and influential as Apple Inc or Exxon Mobil Corp is today. AT&T’s telephone business, which generations of people have since taken for granted, was at least as revolutionary a development as the internet. The idea of being able to converse with someone live, without having to be in each other’s physical presence, not only transformed daily life but made the company an unending stream of money.

    State-Sanctioned Monopoly

    In 1918, AT&T received a government-sanctioned monopoly as the sole provider of phone service throughout most of the United States. Then in the early 1970s, the federal government changed its mind and filed an antitrust suit against the company. The case was one of the largest and most convoluted in history and took nearly a decade to resolve. AT&T ended up divesting itself of its monopoly, which led to the creation of regional telephone companies, also known as "Baby Bells." In 2005 one of those babies, Southwestern Bell, ended up purchasing its erstwhile parent.

    Southwestern Bell then rebranded itself as AT&T, indirectly leading to the creation of a company that can trace its roots back to the 19th century but that we know today mostly as a mobile phone service provider. (For related reading, see: What Is A "Baby Bell?")

    Today, with a market capitalization of $235.54 billion, Dallas-based AT&T is as dominant in absolute terms as it’s ever been. Still, you might be surprised to know that your and your neighbors’ monthly cell phone bills are responsible for only part of that domination.

    A Company in Four Parts

    The company's largest segment actually has little to do with individual phones. Business Solutions is the largest of AT&T's four segments, and provides services used by companies, governments, and other organizations. In today's market, having fast and reliable internet is a must in corporate offices, and AT&T makes a killing providing WiFi and more. In their 2017 annual report, AT&T reported that the Business Solutions segment generated $69.4 billion in revenue.

    As for AT&T's three smaller segments, the second largest is the Entertainment Group, which includes DirecTV, and provides vudei, internet, voice communication and advertising services. The main moneymaker in this segment is U-verse, if you use this service for your tv or internet, this is where your money is going. This segment also handles the few customers still on landlines. This segment makes up 32% of AT&T's total revenue ($50.7 billion).

    The third largest segment is Consumer Mobility, which accounted for 20% of the company's 2017 revenue ($26 billion). This is the service we're all familiar with. If you have an AT&T plan on your phone, this is the segment where that money goes. As of the end of 2017, the company has 141.6 million wireless subscribers.

    AT&T's smallest segment is their International Business. It mainly consists of Latin American operations and Mexican operations, which the company acquired in 2015. The company offers phone, video, and data plans to citizens of the region. AT&T announced its international segment made more than $8.3 billion in revenue in 2017, or 5% of the company's total revenue.

    The Smart Business of Smartphones

    If enabling people to make mobile voice calls was all AT&T did, it would sell nothing but cheap flip phones. The company not only prioritizes the sale of data plans, but also the sale of the vehicles with which to use them. In other words, smartphones. There’s a reason why AT&T can sell a 64GB iPhone that normally retails at $850 for only $400, and that reason is not to be altruistic to customers. A $450 reduction in upfront costs pays for itself several times over during the months and years that an AT&T customer uses such a phone to access data. Allowing more and more people to access that data comes with negligible marginal costs to AT&T.

    Time Warner Merger

    AT&T and Time Warner (TWX) announced in 2016 that they intended to merge into a mega-company. The deal signaled that AT&T would pay $85 billion for the media company, with a 50/50 split in cash and stock. The announcement shocked the business world, as it would mean AT&T would control Warner Bros, HBO, CNN, and countless other assets, radically changing the landscape of the entertainment industry.

    In November of 2017, the U.S. Justice Department sued the companies, setting the stage for one of the most closely watched antitrust battles in modern times. The lawsuit is considered odd, as AT&T and Time Warner are very different companies, which would normally be fine to merge as they wouldn't create a monopoly. The Justice Department has previously demanded that Time Warner divest some of its assets, like CNN, for the merger to go through. AT&T claims that the lawsuit may come from Donald Trump, who is a vocal critic of CNN, using his position as President to punish CNN for reporting damaging information about the Trump Administration.

    The historic lawsuit went to trial on March 19, 2018. Almost three months later on June 12, 2018, Judge Richard Leon ruled in favor of AT&T.

    Other Recent Acquisitions

    Just two weeks after this big win, AT&T announced the acquisition of digital advertising technology and analytics company AppNexus reportedly in a deal worth $1.6 billion. “Ad tech unites real-time analytics and technology with our premium TV and video content,” said AT&T CEO Brian Lesser.

    Just a month later, the company also unveiled its plans to acquire AlienVault, a privately-held company based in San Mateo, California. Through this acquisition, AT&T hopes to expand threat detection and response to AT&T Business Customers. Both companies have approved the deal. Although terms of the deal remain undisclosed, AT&T did share that the deal should not have a material effect on the company's results. AT&T expects the transaction to close in the third quarter of 2018.

    According to AT&T, the acquisition will let the company expand security solutions portfolio and offerings to millions of small and medium-sized businesses.

    The Bottom Line


    AT&T has enjoyed one of the most successful runs in the history of American business, yet still manages to stay technologically up-to-date, relevant and vital. That’s tough for any company to pull off, but any one that does can assure itself of huge profits for the foreseeable future.
    “The Internet wasn’t meant to be metered in bits and bytes, so it’s insane that wireless companies are still making you buy it this way. The rate plan is dead — it’s a fossil from a time when wireless was metered by every call or text.” John Legere 1/5/2017

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    The American Telephone & Telegraph of today is not the AT&T I, my parents and my grandparents grew up with, it's a sad facsimile of it's former self. The dedication of the linemen, longlines, operators, repairmen, Bell Labs, Western Electric, etc. is long gone, replaced by a greedy and flippant attitude towards communications, which the Longlines used to say "is the foundation of Democracy". I'm sure there are some really good people at AT&T today, and they have some amazing products and tech, but the company that gave it it's name is long gone. You can say what you want about Ma Bell, but she was a far better beast than what we have to deal with today.

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    And the selling a $850 iPhone for $400 is generally long gone. Just an occasional BOGO type offer, and prepaid subsidies for lower end or older iPhones like the SE or 6.
    iPhone X on ATT Prepaid. Backup iPhone 7+ on inexpensive Verizon MVNO plan. Hopefully covers me in the continental US for phone usage. Cheaper than a single unlimited plan on ATT or Verizon or T-Mobile.

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    Quote Originally Posted by ilvla2 View Post
    ...I'm sure there are some really good people at AT&T today, and they have some amazing products and tech, but the company that gave it it's name is long gone. You can say what you want about Ma Bell, but she was a far better beast than what we have to deal with today.
    Do you mean like paying a dollar a minute for a long distance call was better? The science, engineering and innovation that is the history of AT&T is amazing. Nonetheless, I don't want to go back to the days of party lines, etc. The business environment changed and they had to change with it.

    The transistor was invented at Bell Labs. Can you imagine life without transistors. I can. I lived it (and party lines). I don't want to go back. Though the high cost of long distance calls did give me an excuse not to call my mother. It's all free now so I have no excuse.

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    As a kid I remember my grandpa insisting on using AT&T because they were an American Company.

    When I became an adult my first landline phone and DSL was through Pacific Bell which then became SBC. I remember voicemail being $14.99 and caller ID being $9.99 per month among other fees that were usually more than the phone service itself.

    But I was also around for the transitions: I was once an AT&T Wireless customer who then became a Cingular customer who then became an AT&T Mobility customer.... ahh the memories.

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    Quote Originally Posted by kevink1 View Post
    And the selling a $850 iPhone for $400 is generally long gone. Just an occasional BOGO type offer, and prepaid subsidies for lower end or older iPhones like the SE or 6.
    Yeah I was gonna say I might hop on that deal.
    Hartford, CT Area

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    Quote Originally Posted by kevink1 View Post
    And the selling a $850 iPhone for $400 is generally long gone. Just an occasional BOGO type offer, and prepaid subsidies for lower end or older iPhones like the SE or 6.
    I was wondering where they came up with that?

    Do you think they're counting bill credits against the BOGO's AT&T is famous for offering on the iPhone?

    But to the OP: Yes AT&T is a beast and she's like the borg. Tear it apart and she comes right back together and bigger than ever!

    Landline phone companies made so much money on us particularly with inter and intra state long distance. A lot of us take for granted being able to call from anywhere to anyone in the US without all those toll and LD charges.

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    Now....back on topic please.

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    Quote Originally Posted by 10mm View Post
    Now....back on topic please.
    Agreed. thread cleaned up.....
    Don't make me turn this car around.....

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    Quote Originally Posted by @TheRealDanny View Post
    I was wondering where they came up with that?

    Do you think they're counting bill credits against the BOGO's AT&T is famous for offering on the iPhone?

    But to the OP: Yes AT&T is a beast and she's like the borg. Tear it apart and she comes right back together and bigger than ever!

    Landline phone companies made so much money on us particularly with inter and intra state long distance. A lot of us take for granted being able to call from anywhere to anyone in the US without all those toll and LD charges.
    Speaking of "The Borge," AT&T has a facility in Fairfax, Virginia, which has Borge Street running past the campus. I have not heard the street name pronounced, so it could be named after a person, such as Victor Borge. The late Danish pianist and comedian pronounced the name as two syllables.
    Earl F. Parrish

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    Quote Originally Posted by efparri View Post
    Speaking of "The Borge," AT&T has a facility in Fairfax, Virginia, which has Borge Street running past the campus. I have not heard the street name pronounced, so it could be named after a person, such as Victor Borge. The late Danish pianist and comedian pronounced the name as two syllables.
    That's funny. I'm a huge Star Trek Next Generation fan so I keep thinking of:

    Name:  BorgFirstContact.jpg
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