Telcos struggle as subscribers dump legacy video and copper subscriptions

by Steve Blum • , , , ,

San benito pole route 13apr2019

It’s been a bad couple of weeks for big wireline telcos. Frontier Communications’ bankruptcy led the parade of dismal news. In a filing with the Securities and Exchange Commission made a couple weeks ahead of going into bankruptcy, Frontier pinned the blame for its problems on its legacy copper business and the less-than-lucrative rural customers who depend on it. But that was no surprise.

AT&T’s and Verizon’s troubles weren’t exactly a shock, either. Some business lines, like video and copper-based broadband service, have been fading for some time. The covid–19 emergency accelerated that trend. In the first three months of 2020, AT&T lost 897,000 video subscribers and nearly 300,000 DSL customers. Even though its broadband business added 209,000 fiber subs, it still saw a net loss of 73,000 broadband accounts overall. Verizon lost 84,000 FiOS video subs, while gaining 59,000 fiber broadband customers.

AT&T gained wireless subscribers in the first quarter, while Verizon lost some, blaming the store closures forced by the covid–19 lockdown. The real numbers to watch, though, will be the results of the now big three mobile operators in the second quarter. By July, we’ll know if the shift to in-home mobile network-enabled hotspots is significant.

Both companies “withdrew financial guidance”, which means they’re not willing to make any predictions about how shareholders will fare over the next few months.

AT&T’s captain is jumping ship. In a move that’s been long expected, CEO Randall Stephenson will hand off to COO John Stankey in July. Stankey has been working for AT&T for 35 years. He’s been running Warner Media since AT&T took it over, and is in charge of launching HBO Max, which is a streaming video service that’s supposed to compete with the likes of Netflix and Disney. That would be difficult for any executive, but for someone with no history and no apparent friends in the entertainment business, and who spends a lot of time talking about things like “headcount rationalization” – AKA firing people – it would be a miracle.