From: tajen Monday, Aug 2 1999 2:48PM ET
Reply # of 13252
Open Access: What's at stake?
As AT&T lobbies hard to keep its cable systems closed, some say it must upgrade its systems or choke on the debt that paid for them.
By Randy Barrett, Karen J. Bannan, and Louis Trager, Inter@ctive Week
August 2, 1999 5:44 AM PT
I wonder why one of those three aren't sitting on the board, they seem to know more than Armstrong , and the others. "Some know how to do a job, and others know how they would have done it after the job done"
The pitched battle over open access continues to rage. Last week, legions of lawyers, lobbyists and publicists made declarations, filed lawsuits, threw slant bombs and deftly twisted arms to gain the upper hand for their respective sides.
This should show how important Broadband is, and they don't have. "they are yelling the loudest"
Add your comments to the bottom of this page.
Sounds like a dictatorship to me
The dispute is simple: Internet service providers (ISPs) want to provide their customers with high-speed service through the nation's cable system. The nation's cable companies - most notably AT&T (NSYE:T) - have their own Internet agenda and don't want to let them in.
When and if you by your home, are you going to allow one neighbor access to get to the other neighbors house just because it's a shorter route.
What's less clear are the stakes involved. AT&T has made a $120 billion bet that it can retain exclusive control of its recently acquired cable franchises. Access providers continue to expend resources to force open the networks to a customer base they may not be able to reach any other way.
Ya Ya Ya, Daytraders are betting, T is betting I'm starting to believe that half of these analysts must have been hired from the casino's. Speaking of betting how much are the others betting that they want the cable. I would say the bill is getting pretty high and T knows it.
And the Federal Communications Commission (FCC) is betting its "no regulation" policy will deliver broadband competition over time.
And they are correct. (At least the FCC didn't say they were betting it would cause competition.
The economics
The fight is centered at the local level, as public utility commissions consider granting AT&T cable license transfers in connection with its recent purchase of Tele-Communications Inc.
Portland, Ore., and Broward County, Fla., have voted to deny the transfers until AT&T guarantees it will make its local cable plant open to competing ISPs.
Last week, San Francisco approved the licenses but said it would revisit the open access issue at a later date. About 600 more municipalities have yet to weigh in on TCI's proposed merger with MediaOne Group.
AT&T, which will soon have control of about 60 percent of the cable market, warns local governments and other regulators that mandatory access would undermine its financial incentive for undertaking the expensive cable network upgrades required to support high-speed data access and cable-telephone service.
All old news, I guess they had to fill up the column , as good columnist should.
"Changing the rules of the game puts a shotgun slug through two inches of Excel spreadsheets that these guys used to generate their rate-of-return calculations," said Milo Medin, who founded @Home and is now chief technology officer at Excite@Home (Nasdaq:ATHM), a cable modem service affiliated with AT&T and other big cable companies. "They are based on the premise that they [AT&T] control the price on access."
Nothing more to be said
Open access supporters, however, contend AT&T is bluffing and has no choice but to upgrade all its systems. It's paying big bucks for TCI and MediaOne and needs to squeeze every dime out of every service it can, as soon as possible, to recoup the premium prices it paid.
If they new that why for gods sake didn't they put a cheaper bid in way before T did. Come on get real people.
AT&T admits it didn't barge into cable because it couldn't resist the video business. Rather, the carrier saw no alternative in its make-or-break struggle to enter the local market, so it can avoid enormous connection fees to the Bells on long-distance calls and offer consumers full packages of wireline and other telecommunications services.
Looking over last quarters statement I would have to agree.
There's more. Excite@Home and Road Runner, the leading companies offering high-speed access, are controlled by cable companies. As these affiliated service providers grow, the cable operators benefit not only from splitting the revenue from subscribers they sign up, but also from growth in the value of their stake in the service providers. If independent ISPs got access to the cable network, the operators would not have that extra benefit of dealing with an affiliate.
I'm not so sure. Cable TV got open access, I had to pay Comcast extra , for ESPN. Along came open access, now ESPN charges if you want ESPN 2, Game packages. Might we have been better off if Comcast (this is just an example) would have gotten a package from them and inturn charged us. Who can say if they would have presented a better price. It's to late now. All that I know is that the price for freedom of choice, can be very expensive at times.
The AT&T revenue directly at stake in the access wars doesn't look huge. The company projects $1.9 billion in residential data revenue in 2004. AT&T takes about a two-thirds cut in its Excite@Home deal, and analysts have said the carrier could expect to get at least as much from independent service providers.
But to justify its huge cable gamble and forge ahead competitively, AT&T is counting on cable telephony and Internet services together to provide fully 12 percent of EBITDA (earnings before interest, taxes, depreciation and amortization) by 2004. That's almost as big a contribution as the company expects from wireless or video, and considerably more than from consumer long-distance.
To get there, AT&T is racing to have a bare majority of the TCI and MediaOne networks upgraded to two-way capability by year's end and 90 percent before 2001. The carrier plans to spend $2 billion on plant upgrades in 2000 alone.
Racing, betting, god they almost have me out of breath, best to wait for the next open call and listen in.("My Grandfather said better to get it straight from the horses mouth") He may have been right.
The steep prices AT&T put up for TCI and MediaOne assume that 22 percent of its cable homes passed subscribe to high-speed Internet by 2004, up from 8 percent from 2000; and that 30 percent sign up for cable-telephony, up from 13 percent next year.
ASSUME if we are going to "assume" lets go a little higher and say they do 60 percent. All we can do is panic , or wait and see what happens .
AT&T has threatened to withhold Excite@Home service in Portland until local regulators give up on their open access demands. But a widespread embargo to other recalcitrant cities is doubtful, according to Scott Cleland, an analyst at Legg Mason Precursor Group.
Lets all give Scott Cleland a call and see if thats all he has to say, I doubt it. (Again that is my opinion, as is theirs.)
"AT&T is holding its breath and saying it's going to keep holding its breath until open access goes away," Cleland said. "We all know it's going to have to take a breath and upgrade. AT&T can't put every city at the back of the line. At some point, it can't afford to carry the debt it assumed when it bought TCI."
If you will notice this whole article is a quote. Wouldn't you like to know who said what, and not she said he said.
Portland, which imposed the first access requirement and won a federal court victory, isn't that hard to snub. It's part of AT&T/TCI/MediaOne's seventh biggest market cluster, with about 600,000 subscribers. Miami, where the access battle rages, is a little bigger, with about 610,000 subscribers; and San Francisco - where AT&T won its franchise transfer, although the city promises to revisit access later - has more than 1.5 million customers.
This would be a good time for them to tell us who there betting on.
Access supporters, including America Online (NYSE:AOL) Chief Executive Steve Case and MindSpring Enterprises (Nasdaq:MSPG) CEO Charles Brewer, say cable companies are being shortsighted: Independent ISPs could help grow the cable modem pie, they argue, and the cable operators would come out ahead even if they had to share some slices.
Didn't AOL have an opportunity a while back, who really wants the bigger slice of pie.
"I think they're going to re-examine the model in 2002 [when current exclusive cable modem deals expire], if not before then," AOL Senior Vice President George Vradenburg said.
I believe that" ahhaha" answered in an earlier post
The business issues go much deeper, analysts said. AT&T and cable companies don't just fear for their high-speed Internet positions. They also are defending against new competition that online providers could offer against their base services, in the form of Internet telephony and Net-based video-on-demand. Internet telephony "is a huge consideration, and that is what AT&T probably is most worried about," said Michael Harris, president of Kinetic Strategies, a broadband research and analysis group.
I'll only say one thing to that, I could say much more. How many of you had the chance to compare the download time of one of many movie (trailers) out there. Most are 10 to 15 MB. It would take quite a while without Broadband.
See also: ZDNN's Internet section
Watch the show on TV everyday, very good show.
RG |
