AT&T Exits $63 Billion Dollar Consumer Market – Will There Be More?

FRAMINGHAM, MA – AUGUST 2, 2004 – AT&T provides local and long distance phone service to 35 million U.S. households, ranking it as the nation's largest long distance company and the single largest competitor to the 4 RBOCs in their core local consumer markets. On July 22, however, AT&T announced its decision to stop competing for consumer local and standalone long distance business.

"AT&T's decision to exit the legacy consumer market is not a non-event," said Mark Winther, group vice president of Worldwide Telecommunications at IDC. "We expect similar decisions from other large CLECs to follow."

The results of the FCC's triennial review and its ultimate rejection by the U.S. Court of Appeals has triggered a series of events that have ultimately led to AT&T's decision to begin the process of withdrawing from the mass market.

Even without the burden of competing in the consumer market, AT&T faces a challenging market in which competitors are willing to price their services at levels that allow for little or no profit in order to gain share. Although AT&T has stated that it will continue to accept new subscribers while caring for its current customers, the process of maintaining what is essentially a dying business will be an unpleasant process.

IDC's new study, Will the Last Person Please Turn Off the Lights: AT&T Exits Consumer. Will There be More? (IDC #31670), discusses the impact of AT&T's decision to focus attention on the enterprise market by withdrawing all marketing and advertising for its legacy consumer products. AT&T will continue to service existing consumer customers and will have a presence in the residential market with its CallVantage VOIP products. However, the implications from both a competitive and historical standpoint loom large.

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