AT&T: Cable's enterprise play will challenge us initially with internet access

AT&T (NYSE: T) is aware that the cable industry's move to penetrate larger businesses is a growing threat, but the telco says it initially will compete with MSOs to sell internet access services.

Despite the potential threats from Comcast (NASDAQ: CMCSA) and Charter Communications (NASDAQ: CHTR), Rick Hubbard, senior VP of networking product management for AT&T Mobile & Business Solutions, told FierceTelecom that large enterprises aren't going to hand over a large portion of their business to a cable provider anytime soon.

This is because cable operators don't have the network breadth and relationships that a large incumbent like AT&T enjoys.

"I think it's a bit too early, but where they are going to enter will be in internet service," Hubbard said. "They would all have to cobble together something to get a full scale MPLS service and I don't think any big enterprise wants to be the guinea pig, but you will see them trying their internet services out."

AT&T can also battle any cable threat by continuing to enhance its on-demand Ethernet capability, which allows a customer to throttle up and throttle down their speeds.

However, the ongoing consolidation of the cable industry will eventually make cable a formidable competitor as these deals have given some MSOs greater network scale.

Altice's pending acquisition of Cablevision and Charter's dual deal for Bright House Networks and Time Warner Cable will give these MSOs a larger set of network weapons to target larger businesses.

Meanwhile, Comcast Business, which continues to see strong small to medium business (SMB) sales, has set a goal to target satellite offices via its new enterprise division.

"Cable is going to be a formidable competitor, particularly as they each now have gotten more footprint with the mergers," Hubbard said. "It will take time for that to play out, which is why in that time we need to make sure that we continue to differentiate with speed, reach and customer experience."

Hubbard added that focusing on being responsive to customer needs will also be a differentiator it can hold over cable, an industry that has traditionally scored low on customer perception surveys.

"Customer experience is key," Hubbard said. "With a handful of exceptions, none of the cable guys rate as supreme customer experience type companies -- at least in the consumer's eyes."

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