Why AT&T and Comcast Are Changing Their Brands

The phone companies saw the writing on the wall back then. Americast put them into competition with the cable television companies, which at the time were many small companies. Then the baby bells started merging, so TV was put on hold.

Next, the cable television companies made their move. Seeing what the phone companies did, and after merging into fewer and larger companies like Comcast, Time Warner (NYSE: TWX), Cox and Cablevision, they started offering VoIP telephone service over the Internet. That let them compete against the bells.

Recognizing that threat, phone companies recently started to offer their own IPTV television services, like AT&T U-verse and Verizon FiOS. After they ironed out the kinks in the first few months, the quality was excellent, and these services are becoming a real competitor to cable TV.

Then the cable television companies wanted to get into wireless and started reselling cellphones from Sprint (NYSE: S). That was a flop. Next, they partnered with Sprint to bring Clearwire into existence, and now they sell a wireless Internet service.

So the new wave of competition in the marketplace has begun. The phone companies' IPTV services and satellite television companies like DirecTV (Nasdaq: DTV) and DISH are competing with the cable television industry for the big all-or-nothing bundle.

I like what Comcast CEO Brian Roberts says when he talks about changing the company and the industry in customer's mind and reaching out to them in new ways. He sounds like he understands the changing opportunities and threats to his business. He is trying to change the cable television side.

Going forward, each side will lose some customers, but each will enjoy increased earnings from those who remain and buy more services. The same thing is happening to phone companies, cable television companies and wireless companies.

Remember the comedian Lily Tomlin from the 1970s television show "Laugh-In"? She played Ernestine, the telephone company operator. She would say, "one-ringy-dingy, two-ringy-dingies, oh yes gracious me, to whom am I speaking?" Week after week, she would play on people's disgust with their local phone companies' full-of-themselves attitude. At that time, local phone companies had no competition, and the customer suffered.

However, since the early 1990s, the phone companies have reinvented themselves and built their new brand and have been continually improving the experience for customers. Because of that effort, they are now rewarded with a loyal customer base.

The difference between the two companies

That is the difference between the two companies. I think AT&T and the phone companies in general have been doing this longer and have a better relationship with the customer and are pushing the brand-change boulder down the hill. Comcast and the cable television companies, on the other hand, are early in the process and are pushing uphill.