CES: No coat, no pants, no matter. I want broadband

January 9, 2008

homeless.jpgAT&T spooked the markets on Tuesday after admitting seeing softness in its consumer businesses including wired broadband and telephone services, with less of an impact on the company’s wireless business.
 
Meanwhile, at the Consumer Electronics Show in Las Vegas – clearly a more cheerful city – executives, including some from AT&T, were decidedly more optimistic about the prospects for telecommunications companies in the event of a downturn.
 
Scott Helbing, AT&T senior vice president for entertainment services said consumers have become so addicted to broadband Internet access they’re likely to say “I’ll forgo the coat or the second pair of pants” for a broadband connection.
 
Similarly Muzib Khan, a product manager for Samsung Electronics U.S. mobile phone business likened the importance of cell phones to food.
“Cell phones are a necessity,” he said. “From our point of view the cell phones that we’re selling and the features we’re selling (add value) for consumers. I don’t think they’re going to say we don’t want that value add.”
 
In the third quarter AT&T found that about 50 percent of its U-Verse customers were opting for the most expensive $129 a month package of video and broadband services based on the company’s fiber optic network.  Helbing did concede that in the event of an economic downturn “maybe that percentage could draw back.”
 
Khan said that the impact of a slowdown could also be softened by the fact that U.S. carriers heavily subsidize the price of cell phones. But Sprint Nextel does not plan to subsidize any devices it sells for a high-speed wireless service it is launching in April based on WiMax.
Asked whether the timing was risky for such a model, the company’s Chief Technology Officer Barry West said, “I really don’t see it.” 

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