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.
New regulation on broadband and telecommunications providers is at top of mind here at ITEXPO. Jeff Pulver, founder and chief executive of pulver.com …
When it comes to over-the-top (OTT) video, it has grown not only in developed regions but also in emerging markets, both as an alternative and complem…
Digium CEO Danny Windham made one thing clear during his keynote presentation at ITEXPO 2015: Businesses of all kinds, at every developmental level, c…
The unprecedented number of security breaches, hacks and DDoS attacks on gaming communities, software manufacturers and even Hollywood studios grew to…
Facebook released a statement not long after the outage had hit, revealing that the cause of the shutdown was not "...the result of a third-party atta…