AT&T plans to use its recently acquired Cricket prepaid brand to disrupt the lower end of the industry. AT&T CEO Randall Stephenson said the company expects to close its acquisition of Leap Wireless later this month.
“All of the sudden overnight, Cricket is going to have nationwide coverage,” Stephenson said. “We’re going to see if we can be a little bit disruptive at that end of the market.”
Speaking during a Morgan Stanley investment conference that was broadcast online, Stephenson said initially Cricket would remain a no-contract play but added that after AT&T gets a better handle on the credit risk, it wouldn’t rule out a postpaid offering under the brand.
Stephenson outlined a synergies between AT&T and Cricket, saying that AT&T’s Next upgrade program, which allows postpaid customers to trade in devices every 12 months, would give Cricket customers access to a fresh supply of refurbished devices. Stephenson claims that as of December, 20 percent of AT&T postpaid customers were financing their devices.
During the talk, Stephenson commented on a range of issues. He said AT&T had suspected 2013 would be a year of disruption but added that the source was not necessarily expected.
“The player that turned out to be the most disruptive wasn’t the one we expected,” Stephenson said, adding that he was excited to see four major U.S. carrier competing on network quality. He said that competition has resulted in some fundamental changes in carrier business models, especially as consumers being moving away from device subsidies.
When asked about the recent dissolution of the FCC’s Open Internet rules, Stephenson said the effects would be “inconsequential.”
“The industry had landed on a Net Neutrality approach that was healthy…we think the industry is going to land on a place that won’t look too dissimilar from that,” Stephenson said, adding that dragging the industry into a detailed Title II-type rulemaking would be a disaster.
Perhaps top of Stephenson’s mind was the upcoming broadcast spectrum auctions, which he said were going to be a monumental challenge.
“This one is no lay up for anyone,” Stephenson said, calling it a “triple bank shot” for the FCC, in terms of difficulty. “The range of outcomes is really, really wide. There could be a lot of money invested by the industry at large…We obviously have our own assessment in terms of the range, and it is a wide, wide range.”