AT&T Is Reportedly Considering To Subsidize Its Wireless Phone Plans With Ads

The American telecommunication company AT&T is considering subsidizing its wireless phone plans with ads, Chief Executive John Stankey said in an interview with Reuters. He says that if the customers are given a choice, “they would take some load of advertising for a $5 or $10 reduction in their bill.”

Back in 2014, AT&T had experimented with subsidized phone plans which lets the brands pay the company for delivering content without cutting off the consumers’ data capacity. However, its new move which is still in the planning phase is expected to be distinct from the older model. It’s still unclear how will AT&T show ads to its consumers.

Earlier, various companies including Amazon, Virgin Mobile USA, and Sprint’s Boost Mobile had tested similar services but have not gained quite a success in it. Meanwhile, AT&T is hoping that their strategies and ideas contribute expansion of their market. To layout, the foundation in the advertising business, AT&T is launching a streaming service in the name of ‘HBO Max’ that would be supported by ads. Stankey conveyed in the interview that HBO Max will act as a “foundational element” for the new phone plans. He added that these new plans will be rolled out by 2021 or 2022.

The company is striving to make the advertising experience for the consumers better by tuning and refining the ads. This would help AT&T to sell ads at higher rates. Over the years, the firm has expanded its portfolio in various industries. For instance, AT&T bought DirecTV, a satellite television service provider, in 2015 for USD 65 Billion which provides useful data for the advertising business. Fast forward in 2018, it acquires Time Warner (WarnerMedia), a mass media conglomerate, for a whopping USD 85.4 Billion.

When the deal was announced, the merger was disrupted citing that AT&T is indulging in anti-competitive practices. However, the company won the case after the court declared that they won’t impose any conditions on the mergers’ approval. This was not the end of AT&T’s face-off with the federal judge. In 2019, AT&T had to pay USD 60 Million over its misleading plan that offered unlimited data plans and further reducing the data speeds.

According to the financial statement reported in May 2020, AT&T’s debts total USD 164.27 Billion. Therefore, to reduce the burden on the company, AT&T issues the notices for the early redemption of bonds worth USD 1.2 Billion. Moreover, the company is exploring the sale of its advertising technology unit, Xandr, Reuters reported, citing the people familiar with the matter. The company’s unit which was launched in 2018 could justify the acquisitions of WarnerMedia and DirecTV.

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 Besides this, WarnerMedia has been hit hard as major sports events were canceled owing to the coronavirus crisis. According to the Q2 earnings, WarnerMedia has lost around USD 1.5 Billion due to the pandemic while Xandr’s revenue declined 25% in the Q2.  Furthermore, the overall company’s revenue plummeted by 9% YOY to USD 45 Billion.

The telecommunication industry is rampantly moving towards providing 5G Hotspot service and plans to the consumers.  Recently, AT&T announced the launch of Netgear Nighthawk 5G mobile hotspot which is expected to go on sale on September 18, 2020, for USD 509.99. Its device offers the capability to connect over 32 Wi-Fi devices and uses Wi-Fi 6.