AT&T: System to reach low-income homes, too (1 Viewer)


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Apr 18, 2005
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'High-value' customers had been target for new fiber-optic service

AT&T Inc., criticized for planning to target higher-income customers with its new Lightspeed video programming, promised Monday to reach more than 5.5 million low-income households in the initial three-year rollout.

AT&T, the former SBC Communications Inc., also said it has begun offering wireless broadband service in a number of North Texas towns and will work with another company to offer satellite-based broadband service to rural areas.

Speaking to the Detroit Economic Club, AT&T chairman and chief executive Edward E. Whitacre said that Lightspeed, an advanced fiber-optic system, "will be deployed wide and far, in keeping with our desire to see broadband everywhere."

Project Lightspeed, in a limited launch in San Antonio since late 2005, will offer voice, Internet and video programming over a fiber-optic network.

By the end of 2008, AT&T expects to invest about $4.4 billion in Lightspeed and reach 18 million households.

Mr. Whitacre said AT&T would introduce the product next in Houston.

AT&T expects to enter 15 to 20 more markets by the end of 2006.

The announcement about reaching low-income customers may quell some of the criticism AT&T has received over whether lower-income customers would get the advanced telecommunications services later than higher-income areas.

"The [AT&T] statement really isn't about serving consumers," said Kirsten Voinis, spokeswoman for the Texas Cable & Telecommunications Association. "It's about damage control. It's about trying to appease lawmakers."

Previous briefing

When AT&T executives briefed analysts about the project in November 2004, they emphasized how Lightspeed would be built to appeal to "high-value" customers – households that spend $160 to $200 a month for telephone, Internet and entertainment services.

AT&T estimated that by the end of 2008, the Lightspeed network would reach 90 percent of its high-value customers, which represent only about one-fourth of its customer base.

In the same time frame, AT&T has said it expected to reach 70 percent of its "medium-value" customers, those who spend $110 to $160 a month.

The medium-value customers represent about 40 percent of its total customer base.

The 5.5 million-plus low-income customers would represent about one-third of Lightspeed's potential customers by the end of 2008, roughly proportional to the percentage of AT&T's customers not considered medium- or high-value.

'Net neutrality'

The question of low-income vs. high-income customers became an issue last year when the Texas Legislature made it easier for AT&T and other companies to begin offering video cable service.

Opponents alleged that AT&T would cherry-pick its customers to serve the most profitable homes and ignore lower-income neighborhoods.

AT&T and Verizon Communications Inc., which also supported the legislation, denied any intent to discriminate against poorer households but also battled efforts by some lawmakers to require the telephone companies to offer video service to all their voice customers.

Analyst Albert Lin of American Technology Research Inc. said AT&T is in a battle with major Internet companies that want Congress to guarantee "net neutrality" over the lines of AT&T and others.

AT&T is trying to avoid fears that it will discriminate against other companies and users.

"What they've done is to listen to this constant criticism that 'Even if we buy into your view of competition, it's only going to serve the wealthy,' " Mr. Lin said.

Other plans

AT&T also announced two other initiatives to bring broadband service to rural and less-populated areas.

It began offering wireless broadband service in Frisco, McKinney, Prosper, Centennial and Little Elm, and plans to expand it this summer to Red Oak and Midlothian.

It also said it is teaming up with Internet provider WildBlue to offer high-speed broadband service through satellite technology.

The service will be offered to "select rural markets later this month," AT&T said.

The monthly cost will run from $49.95 to $79.95 for download speeds up to 1.5 megabits per second.

AT&T shares finished up 17 cents, or 0.7 percent, to close at $26.14 in trading Monday on the New York Stock Exchange.

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