( re-edited )Steve, I am very suspicious when an ATHM investor has to come on an AOL thread and spam it in order to get his stock up.
Very suspicious.
I own @home.Significantly less than AOL though. Why? Because........
.
I have here Armstrong's speech.
He speaks of " billions of dollars in access charges by the Baby Bells " that "the
Bells have been using" to " finance overseas investments from the
European Union to Brazil to East Asia. Long-distance callers are
subsidizing those investments every time we pick up the phone, because
our calls have to pass through that last mile."
Do you think that the Baby Bells are just going to let the FCC give Armstrong this billions back AND give him a cable monopoly by approving the TCI acquisition??
NO steve. They will bring all these billions back and build cable and whatever else it takes to get AT&T's dander up.
W A K E U P steve.
Here is Armstrong's speech and what I see is this:
a) He is afraid of 500+ companies getting into the telco business, cable and all, with all of whom AOL is dealing and wheeling
to become their vertical portal.
b) He is afraid the Baby Bells will ( and can ) do the same thing.
This is why he is rushing into this.
However it will be 3-5 years before it even gets off the ground. 5 years of battling the Baby Bells and AOL.
And that's just to get cable off, let alone to increase his "eyeballs count" from current ~1,000,000 in US to AOL's 18+ mill.
The only why he'll get anything done is by dealing with AOL and the Bells. Only then, maybe, they will let him have a piece of
the pie.
Bottom line though is that the pie is giant and so far AOL has the biggest piece and is the hungriest,grabbing ever bigger pieces,
TA
PS BTW lurking over the @home thread today, for 1st time, I get the impression that all you guys are deathly afraid
" of the competition ", ( AOL ). Are you, steve? <g>
==============================================
cbs.marketwatch.com
Text of AT&T CEO Armstrong's speech
By CBS MarketWatch
Last Update: 5:39 PM ET Feb 10, 1999
Tech Report
Media Report
The following is a transcript of C. Michael Armstrong's speech at the
National Press Club on Feb. 10, 1999. Armstrong is chief executive
of AT&T Corp. The transcript was provided Federal News Service, a
sister service of CBS.MarketWatch.com
C. Michael Armstrong: The first thing I want to do is thank the press --
and I mean that sincerely -- for the very thorough and frequent and fair
coverage of AT&T the last 15 months.
In fact, the coverage and maybe the frequency and visibility of the
company through that coverage has brought the business life into my
family life, when my mother-in-law, who is 85 years old, and sees through
the press and the television a lot of her life, saw the IBM deal. She called
up my wife and said, "Isn't that just wonderful that after being with IBM
for 31 years that Mike could purchase it? But don't you think $5 billion is
a little high?"
And one of the nicest things happened just the other night after the Time
Warner joint venture announcement. Public television had invited me to
comment on that, and it was in the evening, and my grandson, who is 15
months, was watching television. They came to the close-up and he saw
me and he ran up to the TV and hugged it. So that's worth the Time
Warner deal all in itself.
Well, I'm not hear to talk about my family, but what's going on in the
world of communications. And the landmark telecommunications act of
1996 marked its third anniversary on Monday. And I think America
should celebrate this occasion with a massive tax cut -- not from the
federal government but from your local phone company. And the tax cut
I'm referring to is the $10 billion a year that the local phone companies
charge you and I to originate and terminate our long-distance calls.
Out of every dollar we pay in long-distance charges, an average of 30
cents goes to the local phone company. This is a consumer tax, because it
represents a regulated mark-up of 400 percent over what it actually costs
the local phone company to originate and complete that call. Access
charges are a form of pricing that can only exist in a monopoly market.
But to compound matters, access charges are now a weapon that serves
to keep that monopoly intact.
The telecom act is a rare piece of bipartisan legislation designed to open
the local telephone market to competition, and to give consumers the
advanced communications services of the digital age. Congress realized
that 98 percent of long-distance traffic still has to be completed through
the networks of the local monopolies. So the telecom act provides that the
short trip through those monopoly wires shouldn't be prohibitively
expensive for new competitors. It says newcomers shouldn't have to
subsidize the local companies. In other words, we should pay cost plus a
reasonable profit to the local company, and that would certainly be in the
spirit of the telecom act.
The regulators have let the Bell companies continue to charge these
excessive fees. And if this continues the effect on consumers as well as on
new competition is going to be chilling. The consumer effect is painfully
obvious. We're being hit with $10 billion in unnecessary costs right now.
And how is new competition going to grow in a market where costs and
prices are set arbitrarily high to the advantage of the monopoly provider?
If you would, put yourself in the position of a new competitor in the local
phone market. You want to offer a combination of local and long-distance
service, probably add some advanced features to differentiate your offer
-- in other words, you want to do just what the telecom act said to do.
However, you will soon find that access charges force you to subsidize
your biggest competitor, the existing local monopoly. And access charges
raise your own cost for breaking into the monopoly market. The local
Bells will typically charge 4.6 cents per minute to carry your call through
their network, a service that only costs the local Bell six tenths of a cent.
You know, curiously that's just about what they
charge each other when they have to handle each
other's calls. But you have the privilege of paying
more than four times that price for the vast majority
of our long-distance calls, those calls where we
have no choice but to use the monopoly company's
local network.
How long do you think you as a new competitor
could last with that as your cost base? You would
soon be losing money on every long-distance call,
and eventually lose market share because the
playing field was not close to being level. And,
most importantly, consumers would never get the
choice in services that a competitive market would
bring.
Needless to say, the Bells want to sustain those
access charges. Lately they've been threatening
consumers with higher local phone rates if access
charges are taken away. But in fact precious little of
those billions of dollars in access charges go to support local service. The
Bells have been using this cash to finance overseas investments from the
European Union to Brazil to East Asia. Long-distance callers are
subsidizing those investments every time we pick up the phone, because
our calls have to pass through that last mile.
Admittedly AT&T is on its way to reaching customers directly over cable
TV lines, thanks to our merger agreement with TCI and our joint venture
with Time Warner. These agreements will give us a path to about 40
percent of American homes. But more than that they'll give us the ability to
exploit the convergence of television, computing and telephony, to create
a whole new generation of communications, information and entertainment
services. For the sake of perspective, it might be worth just a minute to
explain what this means as well as what it does not mean.
Consider the capability the digital cable pipeline will provide a typical
American family. A cable box on your TV will not only let you order
pay-per-view movies; it will be a virtual communications center. When
you come home you can turn on the TV, the PC or the telephone to
retrieve all your messages -- e-mail, voice or fax. Or if you're on the road,
have them read to you over your wireless phone as the network translates
voice automatically from text, e-mail or whatever.
The cable box will also give you access to the Internet at speeds a
hundred times faster than today's fastest modems. It will always be on.
No need to dial up and wait for that connectivity.
And the same cable line that brings television and the Internet into your
home will give you as many phone lines as you'd like -- one for mom and
dad, one for the kids, one for the fax, one for the PC, and each with its
own ring. Having had three daughters I would have died for that service.
You could take as many lines as you need, and you only pay for what you
order. Need caller ID or call waiting or call forwarding -- it's all packaged
in a single, simple feature set.
So AT&T's agreements with TCI and Time Warner are exactly the kind
of investment the telecom act was intended to encourage. They are
investments in new technology that translates into new services and new
choices for consumers.
But let me explain what our investments in cable do not mean. There is
nothing in what we are doing that would excuse the Bell companies from
the responsibility to obey the act and open up their markets to
competition. It will be four to five years before AT&T's investment with
the cable companies can have their full effect on consumer choice. And it
will be many years before AT&T or any other competitor will be free
from the dependence on local networks.
American consumers should not have to wait for the benefits of
competition. And really that brings me back to that $10 billion tax. Full
competition will get here a lot faster, and it will be a lot stronger, if federal
and state regulators hang tough and insist that access charges be based on
cost. That would give added momentum to the telecom act just as the act
is taking root in the market.
You know, a year ago the act seemed mired in a swamp of litigation
created by the Bell companies and GTE. But now we can see a way out
of that swamp. In January the Supreme Court upheld the constitutionality
of the act and the authority of the FCC to enforce it. Just as important, the
last three years have convinced many communications companies that the
act has staying power. And like AT&T they are investing in new
technology and new services, in part because the act gives them certainty
that the ground rules of the market won't be shot out from underneath
them.
All of this investment, however, would come to a screeching halt if
Congress were to reopen the telecom act. That would mean a return to
the uncertainty and chaos of the past. No one should doubt that the
telecom act can work if we let it.
Just look at the transformation of the long-distance market that began with
the breakup of the Bell system in 1984. Public policy encouraged new
competitors to come into the long-distance market. The old AT&T
monopoly long-distance network was opened up to competition on fair
terms on a level playing field, and the results were stunning. Consumers
have enjoyed a 50 percent reduction in long-distance prices. >b>The
long-distance market has over 500 competitors, large and small. New
services have exploded as those competitors jumped in to earn your
business. In fact, unless you have just had a telemarketing call around
dinner time, you probably agree that the opening of the long-distance
market has been a rip-roaring success. We can see the same results in the
local phone market if we let the telecom act do its job.
The telecom act of 1996 doesn't need rethinking. It needs enforcing.
Federal and state regulators should continue to stand firm as they have
and send local phone companies the message that their obligations under
the act are not optional.
The Bells must provide a level playing field for us to enter: first legitimately
open those markets to competition; second, stop charging consumers the
hidden tax we call access charges; and then they can enter, and we
welcome them, to the competitive long-distance business. If we enforce
the telecom act and do something about access charges, consumers will
get the services and competitive prices Congress intended. Yes, ending
the access tax will drive a competitive communications market and put
$10 billion back in the pockets of American consumers -- not a bad way
to celebrate an anniversary.
======================================================
Here ae the early reactions to AT&T's recent moves. You are going to have legions of angry and battle ready Baby Bells IMHO; ( many sising with AOL too ):
excite.com
By Louis Trager
04/23/99 03:30:00 PM
AT&T intends to re-establish
the end-to-end scope of the
old Bell monopoly.
AT&T Chairman C. Michael Armstrong is more than
doubling his shareholders' enormous bet on cable broadband for consumers
with an unsolicited $58 billion bid to seize MediaOne Group from the
acquiring clutches of fellow cable giant Comcast Corp.
The megamerger, announced late Thursday, would add a crucial building block in
AT&T's (NYSE:T) strategy to re-establish the end-to-end scope of the old Bell
monopoly.
The carrier would add high-speed Internet and digital video weapons in its role as
dominant national competitor in the residential market to the consolidating Bells.
"We are counting on the broadband cable infrastructure to be the heart of our
strategy," Armstrong said Friday.
Specifically, success in the MediaOne (NYSE:UMG) bid would expand AT&T's
newly asserted leadership of the U.S. cable industry and give the carrier a massive
stake in the RoadRunner cable modem operation and @Home (Nasdaq:ATHM)
counterpart.
Time Warner deal coming?
In addition, it could grease the skids for a partnership with No. 1 cable operator
Time Warner (NYSE:TWX) -- a deal reportedly hung up by MediaOne, a big Time
Warner shareholder.
But the proposed deal would burden AT&T with huge immediate costs in exchange
for finite gains, mostly some years out. Issuance of 626 million new shares as
partial payment would slash earnings per share 30 cents this year.
Even with the acquisition, AT&T would have direct cable access to only one-quarter
of U.S. homes. To circumvent the Bells' high fees and entrenched incumbency,
AT&T would have to continue slogging through negotiations for cable, wireless and
competitive-carrier partnerships.
AT&T promises long-term growth as payoff. Meanwhile, it plans to divest $18 billion
to $20 billion in "nonstrategic" assets, probably including some programming.
AT&T expects its net price to be trimmed by up to $200 million in
Tele-Communications Inc.-MediaOne "synergies" and $2 billion in additional AT&T
cost savings before 2001 - including $850 million in network and operations
expenses, $400 million in access and interconnection charge reductions and $250
million in bureaucratic belt-tightening.
Bells howl
Still, the net price of $4,700 per subscriber is about two-thirds more than the rich
price AT&T paid in its $48 billion acquisition of the larger TCI (Nasdaq:TCOMA) last
year. AT&T acknowledged that deal helped lift market prices and make Comcast
bid almost $50 billion.
MediaOne, however, is a quality property. "This is better stuff than TCI," said AT&T
Broadband and Internet chief Leo Hindery, who ran TCI and would get authority for
the MediaOne assets. MediaOne promises to have 70 percent of its network
upgraded to two-way capability by year's end vs. TCI's 51 percent.
It wasn't clear at press time whether Comcast, the fourth
largest cable operator, would up the ante. The AT&T offer
would reimburse MediaOne shareholders for any AT&T stock
price drop up to 10 percent.
"Comcast may not have the cash" to wage a bidding war,
Kinetic Strategies' Michael Harris said, and may become
takeover fodder itself.
Bells howled at the AT&T offer.
"AT&T is creating Ma Cable, going back to the bygone days
of a [phone] monopoly that happily increased rates 5 [percent]
to 15 percent" annually and at will, Bell Atlantic President Jim
Cullen said. He accused AT&T of hypocrisy in insisting Bell
networks be thrown open to competitors while AT&T assembles its own massive
"closed, proprietary system."
Antitrust objections low
But even with the nation's largest telecom trying to consolidate cable, analysts
didn't expect staunch antitrust resistance.
In the nature of local cable monopolies, No. 3 operator MediaOne doesn't compete
significantly with AT&T's ex-TCI properties, which rank second nationally. And
policy-makers, who liked the TCI deal as the first big battering ram against the
Bells' residential monopoly, may love the MediaOne bid for the same reason.
One hang-up could be that besides owning 70 percent of @Home, AT&T would
inherit MediaOne's 40 percent stake in RoadRunner.
AT&T raised a conciliatory flag, offering to do whatever necessary to gain regulatory
approvals to close the deal this year. The Federal Communications Commission
was closed Friday for a federal holiday and unavailable for comment.
Karen J. Bannan, Dennis Mendyk, William Rodger and Kimberly Weisul contributed
to this report.
====================================================
EOM
Back later
TA |
