AT&T BROADBAND CHIEF DEFENDS RECORD, CONFIRMS SLOWDOWN
WESTMINSTER, Colo. -- Seeking to provide “a reality check” for reporters, AT&T Broadband CEO Daniel Somers angrily defended company’s performance last year and predicted it would fare even better this year. Speaking at CableLabs press briefing here Wed., Somers also confirmed that MSO would slow down its aggressive rebuild program this year to target its capital spending better and boost its cash flow, margins and customer service operation. Most dramatically, Somers tried to downplay recent reports that AT&T Chmn. Michael Armstrong wanted to take his place once broadband unit was spun off as independent company. “I've got one hell of a job,” Somers said. “I'm still here in Denver. I'll be here as long as they and I want me here. Everything else is bullshit. I'm glad he wants my job but so do 400 other people.”
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While acknowledging that AT&T Broadband’s cash flow was down in 2000, Somers disputed notion that MSO had performed poorly or even worse than expected last year. Arguing that MSO “did a lot of investment spending” to upgrade its plant and sign up digital video, high-speed data and cable telephony subscribers, he stressed that it added 2.4 million new revenue-generating units (RGUs) among those 3 new services last year. He particularly emphasized AT&T’s drive to sign up cable telephony customers, contending that company expanded its customer base “faster than many of our people thought” and “created the largest telephone company not on copper in the history of mankind… We had a good year. We met our subscriber target growth.”
Somers dismissed widespread speculation that AT&T Broadband would weaken, or even abandon, its commitment to cable telephony this year because of high cost and steep operational hurdles. Disputing idea that AT&T would wait for potentially cheaper IP- based telephony service to develop, he said cable telephony was too lucrative to neglect, even temporarily: “Telephony is a hard business but boy, it’s one hell of a good business. Why would I walk away from a customer paying over $50 a month?”
Somers said AT&T Broadband, like other leading MSOs, was testing IP-based telephony and saw great promise in it. But, asserting that technology wasn’t ready for commercial rollout yet, he said MSO wouldn’t rush to market with it. “Nobody’s rolling it, lots of people are testing it,” he said. “We think the boat is still in the shipyard being built. In the meantime, we're building a significant telephone customer base.”
Despite his defense of AT&T Broadband’s heavy capital spending over last 2 years, Somers said MSO would take bit of break this year to focus its capital on cable systems with most potential and beef up its financial strength. While he said company still was “investing very heavily” in plant upgrades and new service rollouts, he declined to disclose how much. “We're trying to target our capital a little bit better,” he said, arguing against urgency to introduce interactive TV or any other new digital services this year: “I don’t need to jump the engine anymore.”
Even with capital slowdown, Somers said AT&T Broadband expected to add 25% more RGUs in 2001 than it did last year. He said he expected MSO’s take rates for 3 new services to match pace set in 2nd half of 2000. “This year will be a better year for our company,” he said, predicting higher margins. “We'll end this year much stronger and much healthier financially.”
Somers said recent U.S. Appeals Court, D.C., decision striking down FCC’s cable ownership limits wouldn’t alter AT&T Broadband’s plans at all. He said he was “hopeful” that Commission, instead of appealing ruling, would review it carefully and “put in more intelligent measures.”