Kagan: AT&T CEO Stankey is learning enterprises want private wireless

John Stankey, CEO of AT&T, recently claimed during a recent J.P. Morgan analyst conference that enterprises and companies increasingly want private wireless. What, exactly, does that mean for AT&T? Enterprise customers like companies, universities, smart city’s and more want this for the benefits it provides like increased security and control. But, while it is good to see AT&T sees this as a new growth opportunity, can they meet this new challenge? 

In other words, how quickly and forcefully will AT&T move into this new space? And for that matter, the same question goes to AT&T’s direct competitors like Verizon and T-Mobile. 

We find ourselves in time of change and transformation. That is both a growth opportunity and a challenge for existing players like AT&T. 

Companies who have been built over time under one way of doing business are suddenly forced to change due to industry shifts. Too often they delay this change for reasons like network redesign and profitability. 

Many times, companies try to slow-walk their entry and transformation. That can have disastrous results. 

CEO must walk tightrope between growth, change and profitability

Ignoring or even delaying the industry shift can lead to disaster if the marketplace moves on without them. It is like a wave at the beach. You either ride with the wave or let the wave pass you by. 

This is the choice AT&T has before them today. 

We have seen this with many other companies over time. Remember when Blackberry and Motorola were leaders? Then they missed the industry shift to Apple iPhone and Google Android and apps, and they paid the price. 

This is the same kind of issue the cable television industry has been facing as their industry has been shifting over the past decade and competition is increasing. 

They are changing, but they are trying to slow down the process because they say the old way was more profitable.

Let’s face it. We cannot stop change. This is the tightrope every CEO must walk. It takes skills and luck to make the right moves and at the right time.

AT&T, Verizon, T-Mobile entering private wireless

It is more difficult for legacy companies like AT&T to wrap their minds around this new opportunity compared to newer entrants to this marketplace. 

Even though they are starting to talk the talk, their current situation may cause them to try and slow-walk their private wireless services entry into the marketplace. 

The problem is, there are real competitors in the private wireless space, so AT&T does not have the luxury of this choice. 

You see, companies like AT&T, Verizon, T-Mobile and others, who are leaders in the public wireless space are designed for an entirely different model. This model has been formed with billions of dollars invested over decades of evolution. 

Private wireless is changing the telecommunications industry

Now with new thinking like private wireless, things are changing and quickly. That’s why AT&T can and should adjust to welcome this new growth opportunity, rather than push against it.

Existing competitors think private wireless is not as profitable as public wireless. Yet, that’s what business and enterprise customers want. And they are quickly moving in this direction.

One real concern is, if AT&T, Verizon and T-Mobile do not act quickly and decisively, they will miss this next growth wave. It will move forward and leave them behind in the dust.

That could lead to the same result we saw with many other companies who also made the wrong decisions, like Blackberry and Motorola. 

Reading between the lines it sounds like Stankey is saying AT&T will offer private wireless to their enterprise customers, so they don’t lose the business. 

That sounds good. However, the next question is, will this new opportunity be a full-throttle rollout, or will it be more like a slow-walk?

A slow walk makes sense, so they can keep their more profitable public wireless services for as long as possible. However, I think the rest of the marketplace will win if this happens. 

Delaying this shift will cause the change wave to move on leaving AT&T behind. 

You see, even leaders need to follow the ebbs and flows of marketplace and industry, or they will ultimately lose. 

The risk private wireless presents to AT&T, Verizon and T-Mobile

AT&T is also wrestling with another important issue. Cost cutting. 

Over the last couple years, they have taken a chainsaw to everything. Some items they are cutting are outdated and worth it. Others are more important, and should be kept, yet they are still being cut. 

I have warned that this approach is short-sighted and will be harmful to AT&T in the long run. I renew that warning.  

While cost cutting is admirable, even necessary, it should be done on an ongoing basis for areas that are no longer needed. 

Dramatically cutting everything cuts your legs out from underneath you. That is a desperate move and is never wise. 

AT&T wholesale cost cutting rather than surgical hurts them

A more surgical cost cutting approach is always better. The concerns is AT&T is throwing the baby out with the bathwater.

That’s one reason AT&T would prefer their enterprise customers stay with their public network offerings. It is more profitable. 

However, times are changing and quickly. Private wireless is rapidly growing, and yesterday’s leaders must adjust if they want to continue to lead going forward. 

After all, other companies in the private wireless space are showing solid growth. They don’t have to redesign their entire operation to be profitable. 

Since, this is their primary focus, they can be profitable right from the start.

Wireless competitors showing growth in private wireless

Increasingly, private wireless competitors are jumping into this space faster than ever. It seems the marketplace meaning enterprise customers and investors are convinced this is the next growth wave.

Some of the companies are partnering to gain more expertise in different aspects of private wireless. Other companies are going it alone. 

One thing is clear, private wireless is growing and looks like it will continue to do so going forward.

It all depends on the lenses you view this shift from, yesterday’s leaders or tomorrow’s leaders. 

Private wireless: Qualcomm, Betacom, Federated Wireless, Juniper Networks

New competitors in private wireless include companies like Qualcomm, who is partnered with Betacom. HPE, who is working with Cisco. Juniper Networks, Federated Wireless, NTT, HPE, Ericsson Cradlepoint, Nokia, Intel, Celona, Samsung, Amazon AWS and a growing number of others.

Some of these companies offer full private wireless and others offer pieces of the puzzle, but they are all competitors as the enterprise grows and changes.

I believe, as private wireless continues to show rapid growth, the extra security and complete control it offers will keep this segment on the fast-track. 

Companies, universities, hospitals, cities and more will increasingly be demanding this from their providers for their enterprises. This is a key trend the industry is now heading in. 

So, the real question is, will the historic leaders in public wireless like AT&T, Verizon and T-Mobile quickly jump in and capitalize on this new growth opportunity, or will they miss this change moment because they prefer yesterday’s model? Will they let this new change wave pass them by, leaving them behind like waves at the beach.