AT&T Case Study 10

ATT Case Study Angela Austin Professor McChesney Human Resource Management 7/23/10

Abstract: AT&T is a global leader in the telecommunications industry. The company was founded by Alexander Graham Bell In 1885 and operated much of its early existence as a legally sanctioned, regulated monopoly. With annual revenue of more than $53 Billion and 109 million employees, AT&T provides services to virtually every country in the world. AT&T is now a publically owned Company. The companys fiscal year ends in December and currently there are 121 executives that are listed at AT&Ts Dallas Headquarters. AT&T has a competitive advantage over the whole telecommunications industry. Having exclusive rights to sell Apples Iphone (Americas #1 selling mobile phone) gives the former monopolistic firm a present day secret weapon in the industry. The companys revenue show an increasing trend mainly caused by the introduction and exclusive rights to Apples iPhone. It is estimated that AT&Ts mobile phones and wireless plans (including data) constitute about 43% of AT&Ts stock

AT&T Case Study 10 value and that about 25% AT&Ts mobile revenues are attributable to the iPhone. Stock is currently up to 26.22. The company employs a mix of union and non-union workers who some of which are currently engaged in a negotiation to halt threats of a possible strike. Even though the company is a leader in technology the benefits that employees receive are less to be desired. AT&T the telecommunication giant is lacking severely in the employee incentive/benefit area ccompared to the innovative incentive program that Google offers its employees.

AT&T is a global leader in the telecommunication industry. The American Telephone and Telegraph Company was incorporated on March 3rd 1885. (A Brief History: Origins) Although it has been through many upheavals, AT&T is still the worlds premier voice and data communications company, serving more than 80 million customers, including consumers, businesses and government. With annual revenue of more than $53 Billion and 109 million employees, AT&T provides services to virtually every country in the world. (Meadows) This paper will first analyze AT&Ts history & current position including external & competitive context. Next it will evaluate the companys revenues, trends and stock. Finally it will recommend an innovative incentive pay/reward/benefit system to motivate current employees and to assist with employee recruitment. `The invention of the telephone in 1876 by Alexander Graham Bell led to what is now known as The Worlds Networking Company. The Bell Telephone Company & New England Telephone Company became National Bell Telephone Company in 1879 during a patent dispute with Western Union Telegraph Company. An out of court settlement forced Western Union out of the telephone business and Bell agreed to stay out of the telegraph business. In 1880 National became American Bell Telephone Company & in 1881 acquired Western Electric a major Western Union supplier to manufacturer telephones. This gave Bell controlling interest in Western Union Telegraph. Bell established American

AT&T Case Study 10 Telephone & Telegraph Company to operate its long distance service in 1885. (Meadows) AT&T operated much of its early existence as a legally sanctioned, regulated monopoly. The fundamental principle, formulated by AT&T president Theodor Vail in 1907, was the telephone by the nature of its technology would operate most efficiently as a monopoly providing universal service. Vail wrote in that years annual report that government regulation, provided it is independent, intelligent, considerate, and thorough and just, was an appropriate and acceptable substitute for the competitive marketplace. The United States accepted this principle, initially in a 1913 agreement known as the Kingsbury Commitment. As a part of this agreement, AT&T agreed to connect non-competing independent telephone companies to its network and divest its controlling interest in Western Union Telegraph. (A Brief History: The Bell System) Changes in telecommunications over the years led to an anti-trust suit by the U.S. government against AT&T and the company was forced to split up in1984 (A Brief History: The Bell System) AT&T is now a publically owned Company. The companys fiscal year ends in December and currently there are 121 executives that are listed at AT&Ts Dallas Headquarters. Randall Stephenson is AT&Ts current chairman, president & CEO. Mark Patrick & Mathew Mitchell are both listed as owners of the company. (AT&T Inc Company Profile, 2009) According to Bloomberg Forth quarter show a decline in per user revenue indicates a growing rivalry between the two top U.S. mobile phone carriers ATT & Verizon. (Verizon Wireless-AT&T Competition Heats Up, 2010) AT&T has a competitive advantage over the whole telecommunications industry. Having exclusive rights to sell Apples Iphone (Americas #1 selling mobile phone) gives the former monopolistic firm a present day secret weapon in the industry. Although there are many competitors that have created touch screen phones with similar apps and features, none have been able to gain a hold on todays market share quite like Apple with the Iphone. Having exclusive rights to sell this one product carries great weight within the industry, is a major niche for AT&T and gives this company a major competitive advantage. Below is an Industry analysis showing the competitive landscape for AT&T; Competitive Landscape for AT&T Inc.

AT&T Case Study 10 Demand is driven largely by the construction needs of companies and governments and the desire of industrial customers to improve the efficiency of operations. Profitability depends on the ability to accurately predict costs for a project. Small firms, which can effectively compete with larger ones by having expertise in a particular field, are often hired as consultants on larger projects if they have special expertise. Large firms are advantaged in designing and managing large projects. (AT&T Inc. Company Profile). AT&T's Mission Statement We aspire to be the most admired and valuable company in the world. Our goal is to enrich our customers' personal lives and to make their businesses more successful by bringing to market exciting and useful communications services, building shareowner value in the process. (Meadows) Being the most admired company in the world isnt easy and takes a lot of financial planning. AT&T does just that daily, weekly, monthly, quarterly and yearly. Below is a graph that includes AT&Ts revenues for 07, 08 & 09. These figures will help with Trend analysis for future earnings.

Theses figure represent dollar amounts in the billions. According to an article by Trefis.com; iPhone is 25% of AT&Ts mobile revenue and mobile is 43% of AT&Ts stock;

NYSE:T) stock depends on the iPhone and how future Smartphone data revenues trend. We estimate that AT&Ts mobile phones and wireless plans (including data) constitute about 43% of AT&Ts stock value and that about 25% AT&Ts mobile revenues are attributable to the iPhone. In comparison, about 42% of Verizons (NYSE:VZ) stock is from the companys mobile business and 37% of Sprints (NYSE:S) stock depends on mobile data (internet, text) alone. Competing US mobile providers like Verizon and Sprint are looking to offer the iPhone to their

AT&T Case Study 10 subscribers and the consequences of iPhone competition can be meaningful for AT&Ts wireless data revenues. iPhone exclusivity has helped AT&T consistently gain wireless market share in recent years. The companys wireless business had revenues of about $54 billion in 2009 and we estimate that 13 million iPhone subscribers spending $90 $95 per month account for about 25% of current wireless revenues. 15% of AT&T subscribers have an iPhone 2009 was a successful year for AT&T both in terms of iPhone activations and overall wireless subscriber additions. AT&T added about 8 million net wireless subscribers in 2009, a growth of more than 10% over the prior year. The company activated more than 6 million new iPhones during the second half of 2009 alone. We estimate that AT&T currently has about 13 million iPhone subscribers which account for approximately 15% of AT&Ts wireless subscriber base. (Team, 2010) AT&T Current Stock Information; Stock is up to 26.22. Other statistics are listed below;

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AT&T employees are a mix of union & non-union workers. The Communication Workers of America union is available to workers of many companies large and small including Verizon AT&Ts #1 competitor. Many employees find that while having a union on their side, they are treated much more fairly then without. Some of the benefits that come with union dues are;

You get the legal right to bargain with your employer over pay, benefits, health care, employment security, retirement, and other conditions of employment.

You get to negotiate over policies affecting promotions, job bidding, layoffs, and many other aspects of your job and workplace. (Join us, 2010)

According to the CWA web news; Jul 15, 2010

CWA members at AT&T Internet in Districts 3, 4, 6 and 9 voted overwhelmingly for strike authorization if a fair contract can't be reached.

The current contract expires July 17. Negotiations got underway June 21 in Dallas; the contract covers nearly 5,400 workers.

Key issues include wages, protecting and improving benefits, job security, protections against subcontracting, improved scheduling and time off.

Across the districts, members have been mobilizing, wearing bandages on health care action days and standing up for a fair contract. (ATT_Internet_Members_Vote_Strike_Authorization, 2010)

Bargaining between the CWA and AT&T for the National Internet Contract began on June 21 in
Dallas, Texas -including- wages, protecting and improving benefits, job security,

protections against subcontracting, improved scheduling and time off. (ATT Internet Bargaining, 2010)

AT&T Case Study 10 According to AT&Ts website employee benefits are meek to say the least. Listed below is a copy of a current benefit package at AT&T; As an industry leader, we feel we should set the pace in everything we do. Benefits Our standard benefits are just one of many ways we make our employees' lives better. These may include:

Medical/Dental/Vision 401(k) Savings Plan/Pension Paid Time Off Tuition Reimbursement Life/Accident Insurance

Above and Beyond Because we want the best, we must offer the best, and standard benefits just aren't enough. That means we offer a range of extras that we hope will draw the top people. People like you.

Discounts on AT&T Products & Services Flexible Spending Accounts Ongoing Employee Training (AT&T Job Search & Benifits, 2010) Googles innovative approach to employee benefits is like no other. If more companies took this approach, not only would it make a wonderful place to work, it would also increase motivation, decrease employee sick time and increase overall employee moral which will inevitably increase productivity and efficiency. Listed below are a few of the perks offered to Google employees;

If an employee's bangs are getting in the way during a furious coding session, he or she can schedule an on-site haircut free of charge.

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Onsite gym filled with equipment. For the aquatically-inclined, Google also provides swim-inplace swimming pools.

Employees can play against each other in a quick game of ping pong, billiards or foosball or video games.

Google has laundry facilities available to employees on site. The company even offers dry cleaning services.

Google's healthcare plan includes on-site medical staff. For a small fee, the employee can receive a massage from a licensed therapist in a private room. In fact, Google's massage rooms and bathrooms are some of the only areas in the Googolplex that have opaque walls.

Another famous benefit of working at Google is the 20 percent time program. Google allows its employees to use up to 20 percent of their work week at Google to pursue special projects. That means for every standard work week, employees can take a full day to work on a project unrelated to their normal workload. Google claims that many of their products in Google Labs started out as pet projects in the 20 percent time program. (How GooglePlex Works, 2010)

Google also has an onsite daycare facility. If your car needs an oil change or other common service Google has an onsite service center. These perks allow employees to work without the stress of day to day life. It also makes it impossible to call out for any reason. If an innovative incentive program was implemented at AT&T not only would this plan entice employees to join their firm, it would definitely assist in recruitment of these future company members. After reviewing AT&T as a whole, it is plain to see that this telecommunication giant is and

always has been a leader in the industry. From its roots back in the 1800s and its monopolistic background it is obvious that this is a company that is here to stay. Aspiring to be the most admired and valuable company in the world. Having goals that will enrich customers' personal lives and to make their

AT&T Case Study 10 businesses more successful. (Meadows) However, with that said why then do they lack so severely in the employee incentive/benefit area? Cost is probably the number one reason, but it takes money to make money and happy employees are efficient ones, so if AT&T followed Goggles lead maybe a trend would start with fortune 500 companies making perks like these common in the workplace.

References:
A Brief History: The Bell System. (n.d.). Retrieved July 21, 2010, from corp.att.com: www.corp.att.com/history/history3.html AT&T Job Search & Benifits. (2010, July 23). Retrieved July 23, 2010, from AT&T.Com: http://att.jobs/benefits.aspx AT&T Inc Company Profile. (2009). Retrieved July 21, 2010, from Hoover's.com: http://www.hoover's.com/company/ATT_Inc/rryksi-1.html ATT Internet Bargaining. (2010, July 21). Retrieved July 23, 2010, from CWA-Union.Org: http://www.cwa-union.org/pages/national_att_internet_bargaining ATT_Internet_Members_Vote_Strike_Authorization. (2010, July 20). Retrieved July 21, 2010, from CWA.Org: http://www.cwa-union.org/news/entry/ATT_Internet_Members_Vote_Strike_Authorization Bloomberg Businessweek. (n.d.). How GooglePlex Works. (2010). Retrieved July 23, 2010, from How Stuff Works .Com: http://computer.howstuffworks.com/googleplex3.htm Join us. (2010, July 21). Retrieved July 23, 2010, from cwa.org: http://www.cwa.org/join us Meadows, A. (n.d.). About AT&T. Retrieved July 21, 2010, from IBM&CO: www.anshawn.com/andremeadows/ibmco/att/about.html Team, T. (2010, April 15th). iPhone is 25% of AT&T's Mobile Revenue and Mobile is 43% of AT&T's Stock. Retrieved July 21, 2010, from Trefis.com: http://www.trefis.com/articles/15226/iphone-is-of-attsmobile-revenue-and-mobile-is-4...

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