Award Winning Blog

Friday, January 8, 2010

AT&T A Broadband Booster--Who Knew?

AT&T apparently has embraced broadband so much so that it wants out of the dial up, circuit switched telephone business. On it's face we could endorse this belated acknowledgement of a digital future. But no one seems to examine AT&T's motivations which surely lack altruism.

Let's remember that AT&T declined to submit applications for access to some of the $7.2 billion in broadband stimulus funds. To conserve capital, AT&T relies heavily on the copper twisted wire pair to support its current broadband U-Verse service. Now it wants to abandon the local loop---or mabe it's just wants Congress and the FCC to abandon regulation of the local loop.

I see AT&T's well publicized pitch as a gambit for deregulation, no longer based on easily disputed "statistics" about how competitive the telecommunications marketplace is, but now based on the need to expedite the migration from Plain Old Telephone Service ("POTS") to a completely digital broadband infrastructure. The company that won't seek broadband financial support--lest it have to commit to operating a neutral and open network--wants to rid itself of pesky government regulation which apparently has forced it by "regulatory takings," until now, to skim on broadband investment.

Let's briefly consider this deregulatory end game and the apparent lack of residual value in POTS. AT&T wants us to forget the current state of the marketplace, one that has both competitive and uncompetitive segments. But only with a forward looking, deregulatory approach can this nation acclerate the transition to our "digital destiny." How ironic that AT&T would prefer non monetary regulatory "reform" in lieu of direct subsidies.

Speaking of subsidies, recall that the U.S. government so worried about access to free to air broadcast television by 9% of the population that it offered two $40 vouchers for digital to analog converters and launched an aggressive and successful campaign to educate the masses on the DTV conversion. Dial up voice may have declined in both market penetration and revenues, but it won't drop to a 9% penetration any time soon.

So I'll reframe AT&T's ostensibly noble and futuristic campaign as nothing more than a new strand of a familiar gambit to remove government oversight while retaining government conferred benefits. If AT&T abandons its core public utility mission than it should relinquish all of the rights of way it got at below cost or zero expense. AT&T might also check with its tax counsel for advice on what it might lose when it exits the Title II common carrier safe harbor.


Dave D said...

Dr. Frieden,

I agree with you. These telecommunications companies wish to "have their cake and eat it too" by both opining on the necessity of open and free markets and then requesting government dollars for subsidies. Great analysis of the current situation.

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