Thought this article on T was interesting
Got this from my email, it comes the Atlanta Journal Constitution. It is available on their website - for a fee...
"AT&T wants low use customers to call more"
By Michael E. Kanell, STAFF WRTER
Atlanta Journal Constitution/ Saturday, May 2, 1998
AT&T Corp.'s top executive says the phone company is losing money on millions of its customers, and the struggle to reshape itself will mean coming up with ways to get them to spend more on services. C. Michael Armstrong, chairman and chief executive officer for five months, said Friday that AT&T will try enticing low spending long-distance customers into other options, like prepaid service or using the Internet for their long-distance. "We have 75 million customers, and we treasure them," Armstrong told The Atlanta Journal-Constitution. "But 20 million of those people don't spend more than $10 a month."
The company must either lower costs or raise the revenue from those customers, he said. "In the end, if they want to just dial 1 to get long-distance, I'm going to have to charge them a minimum [monthly charge]."
AT&T is also losing money on all the local service it offers consumers. The company has 300,000 residential customers for local service, including 12,000 in Georgia, but cannot make money reselling the service of Baby Bells like Atlanta based Bell-South Corp. at the rates set by state regulators, Armstrong said.
AT&T has lost $3.4 billion trying to provide local service and has stopped taking new customers. "We have lost $25 a month on each customer," Armstrong said. "If we were any more successful at selling the service, we'd be in receivership."
The $51.3 billion company has a lucrative business offering phone service to large companies - a choice often criticized by BellSouth. Armstrong said the company is only doing what makes sense. "What the narrow resale profit margins force you to do is cherry pick."
The executive scoffed at small companies like MGC Communications of Las Vegas, which has launched local competition to BellSouth in some parts of metro Atlanta. MGC's rates are too low to be profitable, so "it's either a sham or a subsidization," Armstrong said.
MGC's general manager in Atlanta, Jim Mitchell, says operations here will be profitable by year's end.
On Tuesday, Armstrong said AT&T will announce its support for a call - first made by rivals MCI and LCI - to separate each Bell into two businesses: one to run the network and another to sell services. That would put the service business on the same footing as other. companies competing in the local market, he said.
Armstrong also said AT&T sees opportunities as cable TV companies offer phone service.. As cable companies construct those new connections, it offers an alternative path into homes for AT&T, he said. "I think it's fair to say that AT&T would be interested in cable relations going forward."
MediaOne is offering phone service - along with cable television and Internet access - in a small, but growing area of metro Atlanta.
I think that is all of the article - if anyone has access to AJC, you can verify if there is more to the article.
Charles Holcomb |
