The Telecoms' (Dumb) Three-Screen Strategy

Last Updated Jun 30, 2008 7:53 PM EDT

buncha-phones.jpgToday the Wall Street Journal ran an excellent piece on AT&T and Verizon's efforts to create a comprehensive media strategy across three separate screens -- your television, your computer, and your phone -- and then sell ads on top of it. It's an ambitious plan as phone companies run up against the big stumbling block of the industry: There aren't that many people left who need cell phones anymore. As is often the case with ambitious plans, however, the telecoms' reach exceeds their grasp. From the WSJ article:

But some marketers are skeptical that phone companies have any real reach beyond their large mobile-subscriber base. While Verizon has 67 million cellphone customers (and will have 80 million or more if its acquisition of Alltel Corp. is approved), it served just 1.2 million FiOS TV subscribers in the first quarter. AT&T, similarly, has more than 71 million cellphone users but only 379,000 U-verse TV customers. Both have millions of broadband customers, but their portals, and, draw relatively few visitors.

"Integration of anything depends on the weakest link of the integration. It is like a stereo system: If you have a $10,000 stereo but 100-buck speakers, you have a 100-buck sound," says Rob Norman, chief executive of GroupM Interaction Worldwide, part of WPP Group PLC.
Phone companies should be spending the time and money working on something that would get marketers in a tizzy: Ad targeting for mobile users that works. The article mentions that AT&T plans to roll out a mobile ad platform by the end of this year, which is a noble goal and dearly needed if mobile advertising is ever going to really take off. But phone companies are more than likely fooling themselves if they think they can easily muscle into an already crowded media marketplace. AT&T is already losing money in their satellite TV venture, and is unlikely to turn a profit, and most consumers still don't think of the phone company as providing cable.

On the Internet, when I want to watch video I turn to Hulu or assorted video sites. On my phone -- well, on my phone I don't currently watch video for a variety of reasons, including slow download speeds, stupid data plans, and the fact that without 2.5 mm headphones everyone else on the bus gets to listen to Weekend Update with me. But even if those problems are sorted out, phones are rapidly going to become extensions of the Internet, and phone companies are going to be right back where they started.

The answer is clear for telecoms. Provide useful targeting data to entice marketers, and you may yet be able to jump out of the slump brought on by cell phone market saturation. But big dreams of somehow becoming the 21st century broadcast networks will be costly and ultimately failures.