AT&T buying spree could be over

(04/27/99) - AT&T chairman C Michael Armstrong says if he succeeds in buying MediaOne, he will be done purchasing cable networks to provide access to local voice and data customers.

AT&T then will form joint ventures with other cable operators, in which AT&T would run the voice and data parts of the business, and the cable operators would run the TV business, he told a Massachusetts Telecommunications Council forum yesterday.

Armstrong says the company is testing voice and data over cable networks in California now among friendly users. Later this year, the testing will expand to a limited trial with paying customers.

Once that test is completed, AT&T will increase rollouts to more customers, Armstrong says. The company's local services rollout will take place gradually over five years.

AT&T already owns Teleport Communications Group, a local access company, and cable operator TCI. It has put in a $US58 billion bid for MediaOne.

If the MediaOne deal goes through, the cable buys give AT&T direct access to about 27 per cent of US customers. To reach more customers, the joint ventures of which AT&T owns part will be key, Armstrong says.

Informal alliances are not strong enough to base reliable service on. "You can't rely on a competitor for your architecture, ordering and facilities," he says.

With its own cable networks as a core, AT&T will be able to negotiate deals with other cable operators, under which they would get access to AT&T's nets in exchange for AT&T's access to theirs.

The local offerings will offer businesses IP-based services, including voice and data. The local offerings will also include network-based services such as unified messaging. AT&T will be able to offer additional phone lines with distinctive rings at a few dollars each, undercutting regional Bell operating company (RBOC) rates of $15 to $20 a month.

By the end of 2005 Armstrong expects that AT&T will own 9 per cent of the local phone market.

He says AT&T will continue to push RBOCs to streamline ordering systems so customers can easily switch their local services. That is also key to AT&T's local success.

Armstrong hopes his strategy will boost AT&T's growth rate from 5 per cent and 7 per cent, to 10 per cent and 12 per cent.