Preparing a Comprehensive Case Analysis, Part 2

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Preparing a Comprehensive Case Analysis, Part 2
Katrina D. Pratt
Strayer University: Asynchronous

Business 490: STRATEGIC MANAGEMENT: CONCEEPTS AND CASE
December 02, 2012

AT&T Vs. Skype
Author’s note
This analysis will identify the key issues revealed in the case study, “Skype vs. AT&T and the future of telecommunications” (Strickland et al 2011). The analysis will explore the current state of the telecommunications industry with the rapid emergence of the Voice-over Internet Protocol (VoIP) technology, wireless communications and the effects on traditional landline or what is known as Publicly Switched Telephone Network (PSTN). This effort will look into current problems and successes with increased focus on AT&T and Skype. Additionally, this paper will attempt to provide a perspective on the key issues with assumptions of what some of the causal factors may have been. Finally, what the companies’ leadership may consider for the future. Prior to examining the key issues of Skype and AT&T, what is Skype vs. AT&T? Skype was currently one of the industry leaders in VoIP and desired to challenge AT&T and other large phone companies. The telecommunication business is certainly going through a technological revolution with increased demands for faster speeds and services. Additionally the infrastructure is in demand to grow with the customer needs. AT&T along with several other landline based companies owned a major portion of the Internet infrastructure. Skype requires access to the Internet by way of Internet Service Providers (ISPs) in order for Skype to provide their VoIP service. AT&T with the other companies currently could not charge Skype beyond the normal rates for access to the Internet. With a looming battle with the large phone companies this presented some key issues with Skype. Skype was building a strategy for the future state, the keys issues Skype had to work toward solution were: Key Issues

• Declining revenue after the 685 % surge in 2006
• Competing effectively with other VoIP services
• Other larger companies such as Comcast working with VoIP • Address current “free” services
• Establish a plan should Net Neutrality not come to law
Assumptions
• Revenues could be declining due to the ease of access for free services • Connectivity is unreliable on video phone
• AT&T may not be the enemy vs. a potential partner
AT&T was involved in a significant challenge for the future state let alone being challenged by Skype and other VoIP companies. AT&T was in the midst of significant key issues as follows: Key Issues

• Looming vote by the FCC on Internet Neutrality
• Surge in VoIP providers on an Internet AT&T owned significant infrastructure • Cost of Expansive growth via multiple acquisitions and mergers • Infrastructure pressures with expanded use
• Customer satisfaction demands with increased Smart Phone (iPhone, android) data requirements Assumptions
• AT&T expects a return on their investment to the Internet • AT&T has failed to invest in the VoIP business at the rate of its main competitors • AT&T enjoys a strong customer base in traditional landline service and does not want to lose any to VoIP • AT&T’s resources support their acquisition and mergers • AT&T performance indicators lend to AT&T’s abilities for growth Analysis Skype

Skype had experienced unprecedented revenue initially at a rate of 685 percent in 2006 only see significant declines and a flattening in the following years. In order to meet this challenge Skype had to understand why revenue was dropping and the strategies needed to make the charge at the landline PSTN industry. Skype lacked the Internet infrastructure of other large companies and a plan to do business with those companies. Most significant, Skype was experiencing unprecedented user growth yet revenue gains were flattening. Skype was failing to earn revenue commensurate with the services...
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