AT&T Cybersecurity Initiative May Point to Future

By Gary Kim November 15, 2012

AT&T thinks it could earn $1 billion a year providing cybersecurity services to multinational enterprises.

"Every chief information officer at major corporations that I meet wants to talk about security. I think this will be a $40 billion market one day," says Frank Jules, president of the AT&T global enterprise unit.


Image via Shutterstock

In the third quarter of 2012, AT&T earned about $1.6 billion in business-related revenue. So assuming annual business services of about $6.4 billion, a new $1 billion business represents growth of about 16 percent.

It’s a logical thought, and $1 billion in new revenue is nothing to dismiss. But the magnitude of that opportunity shows why it might be likely, despite the seeming improbability that large tier telcos could emerge in a decade as major suppliers of business applications for large enterprises.

If you assume that today’s business is sustained by voice, messaging and broadband access revenue that are declining, past their peak of adoption, about to hit the peak of the product lifecycle or destined to do so within the next decade, then you have some idea of the magnitude of replacement revenue sources that must be found.

AT&T makes about $126 billion annually. AT&T earns 53 percent of total revenue from wireless.  In the third quarter of 2012, AT&T earned $14.9 billion in mobile revenue, of which about $6.6 billion is data.

So estimate voice as $8.3 billion a quarter, or a $33 billion annual revenue stream. Assume AT&T loses half of the voice revenue over a decade. That’s $16.6 billion in lost revenue.

AT&T earns about $6 billion a quarter in fixed network voice revenue. Assume AT&T loses half of that over a decade, representing another $3 billion of lost revenue to be recouped.

Looking only at potential landline voice and mobile voice, AT&T might have to replace as much as $20 billion in revenue over a decade’s time.

Right now, nobody has discovered a single application as big as voice or high-speed access, either on the fixed or mobile networks, big enough to drive revenue gains of double-digit billions for any single tier-one carrier.

Unless such an app materializes, the growth will come from many smaller revenue contributors, each representing $1 billion of annual revenue. Looking at matters that way, tier-one service providers such as AT&T will become major application providers, where scores of apps might contribute to overall earnings. 

Tier-one service providers often are not thought of as providers of applications. They might, of necessity, learn to do so.


Edited by Brooke Neuman

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Apple Goes Social with Video Editing App

By: Alicia Young    8/26/2016

The goal is to offer simple video editing with tools that appeal to millennials and upcoming generations-the people who grew up surrounded by social m…

Read More

How Do the Year's Threat Predictions Match Reality?

By: Special Guest    8/24/2016

Last year, Fortinet's FortiGuard Labs global threat research team made a series of predictions about cyber threats in 2016. We are now halfway through…

Read More

Automakers Invest in Wearable Tech Pilot Programs

By: Lindsey Patterson    8/24/2016

The advent of wearable technology has recently generated a number of creative products. Consumers check for email messages using "smart" watches and i…

Read More

AI's Major Role in EU's New Data Privacy Regulations

By: Special Guest    8/23/2016

Earlier this year, the European Union passed the General Data Protection Regulation - landmark legislation addressing data protection and privacy conc…

Read More

Broadband Delivered by Fiber Proves Better than Alternatives

By: Doug Mohney    8/23/2016

We're a couple years out on an unprecedented boom in broadband, with new wireless schemes, 5G, high-flying drones and constellations of satellites cov…

Read More