AT&T, Faced With Verizon Threat, Becomes More Like Groupon

Is AT&T’s new venture into location-based deals–the first such move by a U.S. carrier on such a scale–a bit of necessary improvisation, having lost its lucrative iPhone exclusivity?

ATT ShopAlerts


With AT&T having lost the iPhone-exclusivity feather in its cap, it’s casting about for new sources of revenue. The picture it’s arriving at is an intriguing composite, ever less like your grandfather’s telecommunications company. With two big announcements today–AT&T is entering Groupon-like territory with location-based deals, and it will be selling the Amazon Kindle next month in its stores–AT&T is becoming less easily definable. And that’s probably a good thing.

ShopAlerts by AT&T” is a new service, the first of its kind launched on such a scale by a major mobile carrier in the U.S. AT&T customers in New York, L.A., Chicago, and San Francisco can opt into the service, which offers deals based on location. It works like this: AT&T sets up a “geo-fence,” a virtual perimeter around a shop or other area, and if you wander into that region, you’ll get a text alert from one of AT&T’s partners that’s offering a deal. (AT&T’s initial partners include KMart, JetBlue, and Kibbles ‘n Bits, so be on the lookout when nearing a KMart, airport, or pet store.)

By offering the place-based deals, AT&T is venturing into a hot
market–the daily deals model set off by Groupon, as well as the
location-based buying offered by Foursquare and Facebook Deals,
active now on iPhone and Android. Given that the deals are ultimately
offered through mobile phones, it makes sense for carriers to want to
get in on this market.

AT&T has partnered with Placecast to power the deals. Placecast is an expert in serving location-based deals, having previously partnered with O2, a major tel-co in the U.K. Placecast has also partnered directly with some stores, including The North Face, last year. But if Placecast can work directly with retailers, why bother with AT&T (and presumed revenue share) at all? We’ve sent them an email to ask, but a fairly obvious reason is hinted at in a quote from the CEO in today’s announcement. It has to do with trust: “Retailers and subscribers alike benefit from messages with tailored offers available nearby, based on their trusted relationship with AT&T,” said Alistair Goodman, Placecast’s CEO.

The other piece of news from AT&T today is its plans to sell Amazon’s Kindle e-reader in 2,200 stores next month. This move is less innovative, falling back on the exclusivity game, since AT&T is the exclusive provider of wireless for the Kindle in the U.S. One analyst has estimated that AT&T probably collects $3 or $4 per month from Amazon for each Kindle on its network. Where does that money go, though, if and when AT&T loses exclusivity, as it did with the iPhone? It’s the location-based thinking that is more nimble and inventive.

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About the author

David Zax is a contributing writer for Fast Company. His writing has appeared in many publications, including Smithsonian, Slate, Wired, and The Wall Street Journal