AT&T's Whitacre: 'Nobody Gets a Free Ride'

AT&T Inc. (NYSE: T) CEO Ed Whitacre spoke to state utilities regulators in San Francisco Tuesday on a variety of subjects, but the one topic he seemed to want to block out was the issue of network neutrality. (See Net Neutrality's End Might Turn a Buck.)

Whitacre spoke to a crowd of about 500 state regulators at the National Association of Regulatory Utility Commissioners (NARUC) annual meeting. The chair of that group’s telecommunications committee, Tony Clark mixed his metaphors thoroughly, calling network neutrality the “800-pound gorilla in the room” after Whitacre’s speech.

Whitacre didn’t mention the issue in his prepared remarks and when network neutrality came up during the Q&A session, Whitacre quipped: "Well I’ve got to go; I’ve got to catch a plane.”

Kidding aside, Whitacre likened Internet access to any other kind of service telcos have offered over the years and said commercial interests should be allowed to pay for the amount of access they need.

Whitacre complained that “some people” want AT&T to act as a “dumb pipe that just keeps getting bigger and bigger.”

“This thing is growing at a rate that nobody would imagine,” Whitacre said of the market demand for bandwidth. He said AT&T networks are now handling 5.6 Petabytes of data every day. “There’s more and more content, and you need more and more bandwidth, and somebody’s got to build it."

“If you build it, you have to make a return on that,” he continued. “Nobody gets a free ride, that’s all.”

This kind of language, of course, leaves open the possibility that AT&T will (or already does) offer some of its customers a better ride across its access networks in exchange for fees. But it doesn't necessarily mean the provider would block content that it disagreed with, which is a fear that most net neutrality backers discuss the most. (See AT&T Sets Up Internet Tollbooths.)

“It’s a much over talked issue; it will all get worked out and will best get worked out on a commercial basis,” Whitacre concluded.

Judging by lawmakers’ attempts so far to get meaningful network neutrality safeguards into law, Whitacre will probably get his wish. (See Net Neutrality Debate Wydens.)

Other issues covered by Whitacre include AT&T's reinvention to become a company that's no longer mostly dependant on access line revenues. AT&T is on pace to lose 2.5 million to 3 million access lines this year, Whitacre said.

“After we complete the BellSouth Corp. (NYSE: BLS) acquisition, a little less than a fourth of our revenue will come from voice,” Whitacre said. He added that more than a third of his company’s revenues will come from wireless services. The combined company, he said, will have more than 10 million DSL customers.

He pointed out that Time Warner Cable Inc. (NYSE: TWC) recently announced its one millionth voice customer. “In video, we are trying to return the favor,” Whitacre said. “We’re doing pretty well on that.” (See IDC Reports on Cable VOIP.)

Whitacre said AT&T is testing WiMax technologies using both licensed and unlicensed spectrum. “It’s pretty good most of the time,” Whitacre said. “It’s not quite ready for prime time, but overall it works pretty well.”

As for video, the CEO said AT&T’s fiber-based U-Verse video offering has already reached a 10 percent market share in places where it is available. To date, the service is only available in select neighborhoods in San Antonio, Texas, AT&T’s home town. (See AT&T to Launch Lightspeed Next Month.)

And though U-Verse has launched, Whitacre noted that there's still room for improvement. “It’s not bad, but it’s not where we want it to be." (See Is Lightspeed Slowing?)

On video franchising, the carrier chief was equally outspoken: “Today’s video franchising is like a relic from another era,” Whitacre said. “If we receive one franchise a day, five days a week, in six years we will be able to offer service to all our customers.” (See Video Franchise Gains Steam in DC.)

Clark told Light Reading that NARUC's telecom committee is in favor of a national video franchise but would support legislation that would "grandfather out" existing state-level franchises.

NARUC’s Clark explained later that regulators even in the smallest states are constantly asking for information about network neutrality. He said NARUC’s telecommunications committee hasn’t yet taken an official position on the subject.

— Mark Sullivan, Reporter, Light Reading