<<...surely please tell me that the board and management and CEO of T yes T haven't put the company ionto a position where it's stock is going to give back all the gains made over the last six months or so..>>.
THERE'S PLENTY TO BE OPTOMISTIC ABOUT!!!!
AT&T All-in-One Plan Could Work
By DAVID E. KALISH
AP Business Writer
NEW YORK (AP) -- Forget that skeptical investors have sent AT (NYSE:T - news)&T shares plunging 13 percent since the company agreed to buy cable giant Tele-Communications Inc. (Nasdaq:LBTYA - news; Nasdaq:TCOMA - news) for $31.7 billion.
Never mind the all-in-one telephone, Internet and video services AT&T Corp. envisions may be several years away and cost billions -- with no set plan for what to charge consumers.
One week after AT&T announced a plan to use TCI's cable-TV lines to send futuristic services to millions of consumers, the nation's largest telecommunications company insisted that what might seem like a pipe dream would swiftly transform people's living rooms into high-tech havens.
AT&T executives, on the offense against persistent skepticism, on Wednesday contended their plan would help beat the regional Baby Bells at selling local phone service as part of a package of related offerings.
''We're very confident we can deliver exactly the capabilities on the timetable that we've stated,'' AT&T chief technology officer David Nagel told industry analysts and reporters in the company's fourth teleconference in the week since the June 24 announcement of the deal.
Trying to reassure industry experts, AT&T fleshed out its plans to spend $4.4 billion plus undetermined further investments these next few years to modernize TCI's cable network and equip millions of homes to handle telephone, high-speed Internet and a wide array of video-entertainment.
The details did little to assuage nervous investors, who continued to bid down AT&T's stock. As the stock market posted sharp gains, AT&T slipped 37 1/2 cents to close at $56.75 a share Wednesday on the New York Stock Exchange.
AT&T said it would cost about $1.8 billion to update TCI's cable lines to carry signals in two directions, needed for the new services. AT&T would cover $1.3 billion of those costs, with TCI paying the rest before the deal closes, as expected, early next year.
TCI so far has updated only about 10 percent of its network, but expects to have most of it ready by 2000.
AT&T is spending another $1.3 billion to maintain and extend the telecommunications network to bring services into people's homes. In addition, the combined company plans to spend $1.8 billion on digital devices in the home.
Another cost is the $300 to $500 per household for in-home equipment to carry phone service via cable lines. AT&T did not give a total pricetag, saying that it would provide the equipment as demand warrants.
Still undecided is whether to charge subscribers up front for the full cost of the needed in-home devices, or to spread out the cost over monthly charges -- similar to mobile-phone service, in which companies practically give away cellular phones in return for long-term contracts.
Analysts said that obstacles lay in AT&T's path. One is the company's own poor record so far in combining into a single bill the charges for its existing range of services.
In addition, the hoped-for phone service relies on a technology that is still in its infancy and has not yet been widely deployed via cable lines.
The companies plan to transmit calls through the Internet, instead of through conventional telephone switches. But today, Internet calls made over the phone can sound distorted. In addition, there can be awkward delays in when a speaker's voice actually reaches the listener.
The companies believe they can overcome these obstacles using new technology, and several industry analysts, though wary, said they think AT&T is on the right track.
''I think there is a high probability of success here. The questions in my mind would revolve much more around 'when' than 'if,''' said Chris Mines, an industry analyst with Forrester Research Inc. (Nasdaq:FORR - news) in Cambridge, Mass.
If AT&T's plan works, it could mark the reinvention of the unwieldy mother of the nation's telephone system into a leading scout for tomorrow's technology.
Moreover, it may be AT&T's last best hope for reinvigorating its still-dominant but sagging long-distance business while expanding into new telecommunications services, such as local calls.
AT&T had been rebuffed in an earlier attempt to buy regional Baby Bell, SBC Communications, to try to crack the local-phone market. In addition, it has pulled back from trying to rent the local lines of Baby Bells and resell service, saying they're charging too much.
''AT&T has to make this work,'' said Ken McGee, an industry analyst at the Gartner Group (Nasdaq:GART - news) research and consulting firm, based in Stamford, Conn.
''There's nothing left. It's like trying to buy lakefront property and it's all been sold.'' |
