AT&T, Verizon Video Strategies Fit Their Revenue Sources

Differentiating business strategies are among the key features of a global telecom business since the wave of privatization and deregulation starting in the 1980s. Where monopoly telecom service providers once looked remarkably alike, in terms of customer bases, products and strategies, they now are beginning to diverge.

In the U.S. market, some now say the clearest example of differentiation between Verizon Communications and AT&T lies in their approach to video entertainment services. Where AT&T bought DirecTV, increasing its exposure to linear TV distribution, Verizon purchased AOL and launched a mobile video service (Go90).

Actually, that divergence arguably is based on other earlier divergences. Verizon, with a smaller fixed network footprint, has become a mobile service provider with about 15 percent of revenues generated by all fixed network operations.

AT&T remains far more “balanced,” earning 44 percent of total revenue from fixed services. Given that profile, it makes sense for Verizon to focus on mobile video, and for AT&T to focus on linear video.

While DirecTV, as a satellite-delivered service, is not strictly “landline,” nor is it “mobile” service. Functionally, however, DirecTV will resemble a “fixed” service, sold to fixed locations.

Both company strategies, though, focus on the ability to sell an entertainment video services that matches its network assets (Verizon earns 85 percent of revenue from its mobile platform; AT&T earns 44 percent of revenue from fixed services).