Relaunching the AT&T Brand

Remember the Paul Newman movie Cool Hand Luke where Paul the warden says “what we have here is a failure to communicate” just before Luke is shot to death by sheriff’s deputies the man with no eyes?  Remember the old saw about rearranging the deck chairs on the Titanic? Spending a billion dollars or so to relaunch the AT&T brand as at&t (read about it in the WSJ here) is right up there on the misdiagnosis and futility index.

This WAS once a mighty brand.  It may even be that this brand is one of the most valuable assets SBC acquired by buying the old AT&T.  When we launched AT&T WorldNet Service under the umbrella of this powerful brand, we had more subscribers within a week than our arch-rival MCI had gained in the year when they had a service and we didn’t.  But we also offered something MCI didn’t – a $19.95 flat monthly rate.

But here’s the importance of brand: we didn’t invent flat rate pricing.  PSI and a few other smaller players already offered it.  We used the power of our brand to get both attention and credibility for an offer which appealed to our customers.  Brand alone wouldn’t have created our initial success.  Flat rate pricing alone didn’t do it for brand-unknown competitors. Brand AND an attractive offer are a dynamite combination.

It wasn’t long before then weaker brands like AOL and MSN had to offer flat rate pricing as well.  Brand literally let us redefine the rules of that marketplace to our advantage as a late entrant – and to our customers’ advantage.  Moreover, AT&T WorldNet Service paid the brand bank back.  There were more press stories (the vast majority of them very favorable or favorable) about WorldNet in 1996 than about all other AT&T services and announcements COMBINED.

AT&T also offered several branded content services.  The internal wisdom was that these would create “fatter, stickier” minutes than WorldNet which was “just” an access service.  Didn’t happen despite the AT&T brand.  Why?  Because a brand only works when it is credible for what’s being offered.  In the old phone world, AT&T provided “access” and users provided content: they talked to each other.  AT&T had credibility as a phone access provider which carried over to Internet access; the phone service almost always worked.  It had no credibility as a content provider so the brand didn’t help move into that space on the Internet.  An AT&T-branded candy bar wouldn’t have sold well either.

This once-great brand isn’t going to be resurrected by advertising the brand itself which is, according to the WSJ story, exactly what the campaign is planning to do.  Brad Feld posted that he can think of “about one billion better uses for the money.” Here’s one idea:

There is a chance the brand COULD be resurrected if it were associated with new services which are both credible to the brand and of real value to customers.  For example, AT&T CallVantage Service – VoIP – has a good reputation among those who’ve tried it.  I haven’t but see Andy Abramson here and BusinessWeek here. As far as I know, they have the best E911 solution among VoIP providers.

Suppose the new at&t put a billion dollars into a real product rollout for this under-exposed service.  Unfortunately, one immediate result would be a LOSS of revenue from existing customers since CallVantage displaces both the over-priced long distance sold by the old AT&T AND the over-priced local access lines sold by the old SBC.  Probably that’s why this won’t happen.  But suppose they did…

And suppose the new at&t also promoted its broadband service by promising not only quality, not only neutrality as far as what other services are offered over those access pipes, but also the best possible access to most content and services whether they come from at&t or not. 

at&t has the ability to deliver these services.  The at&t brand is still credible for promoting these services.  Delivering these services will resurrect the brand in a way that no amount of brand-promotion hype will.

I posted more about WorldNet Service and its flat rate pricing here. And here, my biased view on why WorldNet didn’t go on to conquer the world.

SBC… I mean at&t… CEO Ed Whitacre currently has a negative brand value. He didn’t make friends by threatening to charge his customers extra for using “my pipes” to access Google and other popular services (my rant here).

Of course, the real decline of the AT&T brand started with the emasculation of Golden Boy.

Comments

[Tom Evslin]

Aswath:

This is one of the rare times I disagree with you. Of course you are right that the technogies can be used synergistically and ought to be. But I don't think there's any path which lets at&t hang on to current revenue streams. Any attempt on their part to do that means overcharging their customers or purposely disadvantaging new services: both of which helped to do in the old AT&T.

[Aswath]

at&t can also deploy CallVantage synergestically - keeping the customer tethered to POTS and adding services and features using VoIP. For example in region subscribers of POTS and CV can use CV to advertise their presence information or attend to POTS calls even when they are away from home. After all, the incumbents were thinking of many of these services with ADSI and now they can offer them with out requiring expensive phones.

In other words, they should consider CV primarily for signaling and use POTS for transport. This way they do not hurt current revenue stream, but able to add new revenus streams.

[Mr. Floyd]

Confusing a quote from a film is nothing in comparison to what those butchers did to Golden Boy!

[Tom Evslin]

Thanks, Mr. Floyd. I'll be more careful next time.

[Mr. Floyd]

Hi Tom,

While Luke (Paul) had some memorable quotes, he did not utter those lines. They were spoken by the warden - the same guy who wouldn't allow dirt in the ditch or dirt in the yard. This casued Luke to prepetually dig and fill the same hole.

The wardens side kick was the sharp-shooting, black cladded, Man With Eyes. He never took off his Aviators, and I'm pretty sure he never spoke. So skilled with the rifle was he, that he shot flying birds with it - this served to intimidate the road gang prisoners.

Great post.