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K.C. NEEL
In an effort to goose local phone sales, AT&T Broadband is offering customers in 10 markets free local phone installation and free service until Jan. 31.
AT&T has promised analysts and shareholders it will have between 500,000 and 650,000 phone customers by year's-end. At the end of the second quarter, the company counted 65,000 phone customers. Including the MediaOne properties, AT&T serves 223,000 local phone customers. Executives continue to maintain AT&T will hit its year-end goals.
AT&T offers local phone service in Dallas, San Francisco, Chicago, Denver, Pittsburgh, Hartford, Conn., Seattle, Portland, Ore., and Salt Lake City.
"This sounds like the old-fashioned, tried-and-true `puppy dog' approach," says telecom analyst Jeffrey Kagan. "Let the customer take a puppy home overnight; they fall in love with it and won't want to give it back. It's not a bad idea - if it works."
This will be a pivotal experiment for AT&T, which has had several missteps this year. The company's long-distance business is slowing down significantly, and its wireless unit has received only a lukewarm reception on Wall Street. AT&T's stock is off about 50% so far this year.
"AT&T doesn't want to fall short, and they need to save some face," Kagan says. "Clearly, they've struggled the last few months, and they need something to pull them out of the doldrums."
Kagan believes several marketing models will be introduced by broadband players in the coming months, and this is just one of the many marketing models that will be employed.
"This isn't really very dramatic," he says. "It's really nothing they've not said they're going to do in the past."
AT&T also is planning to bundle its other voice and data services with its local phone service to improve retention.
"You're going to see some churn," Kagan says. "The Baby Bells are ready for the competition, and they're not going to sit still for long. But AT&T is hoping that by weaving all its services together, it will become too difficult and confusing to leave. Hopefully they've learned their lesson from the long-distance business and will create loyal customers."
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