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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

Larry, Monkey 12/5/2012 | 3:45:15 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Wow!
101%
That IS inflation!
startup_shutup 12/5/2012 | 3:45:16 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' http://post.polls.yahoo.com/qu...

What is the greater risk facing the U.S. economy?
Inflation 50%
Recession 51%
35431 Votes to date

whyiswhy 12/5/2012 | 3:45:18 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Actually, yes. Cable had to trench the streets to build their HFC system in my city. The coax to the house is the same as it always was, as is the junction box. As far as I know, no private property was "eased", certainly not mine.

Telephone was considered a public utility in my deed, and as such operated under public control of rates and profit. Controlled monopoly.

Today, name is same, game totally different. Ergo, contract void, no longer meets the definitions, original intent, etc.

Just plain ol' conservative issues.

Gotta love it.

=Why
telco1158 12/5/2012 | 3:45:23 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Dear Mr. Witacre,
I have big, fat, dumb pipes connected to your network.
I've had them for years.
They're called burstable OC3s.
You call them Money Makers.
You were very happy to sell them to me.
I am happy to pay you.
For I sell portions of it to other people.
If they are not happy, they won't buy from me.
They seem to be happy, for I get their checks every month.
What they do with their dumb pipes is their business.
If they want to hog up their pipes downloading music or videos, that is fine.
They can MP3, MP4 and WMA all they want.
My net heads don't care.
It means eventually, they need to buy more.
If my customers don't like me, they go to a competitor.
We call it capitalism, the free market game.
I am happy.
My customers are happy.
But you are very unhappy.
You say Goog and YouTube are playing foul.
Can't you see they are on our side?
My net heads and I don't detest how they play.
And neither should you.
We call their participation Job Security.
There is plenty of fun to be had by all if everybody plays by the rules.
We all know, Ed, you have the biggest team with the brightest uniform.
Please don't change the rules just because your team can't score.
If you do, generations will know you as the Big Loser who took the fun out of the game forever.
paolo.franzoi 12/5/2012 | 3:45:29 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride'
Actually, no. The easements are for utilities and are contracted with your local government. They are NOT directly between you and the utility.

seven
whyiswhy 12/5/2012 | 3:45:29 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Brooks:

Change on any of the terms is grounds for a new deal all around. If cable wanted to change, I'd say the same. Fair.

-Why
rjs 12/5/2012 | 3:45:29 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Right On! Why is right.
No double billing.

Mr. Whitacre wants his hands in the cookie jar so
he can get his hands on the higher margin business so that he can support the bloated cost of his business which is being commoditized and as such cannot bear such higher margins.

And, my access is NOT free! I paid for it the day I signed up for the service. It is none of his goddamned business what kinda of bits I receive at
home.

Mr. Whitacre can always jack up the price of end customer access - make DSL access $100 a month, I will switch to cable. He will never dare do that as long as there is competition. He is flexing his
muscles where there is no competition. This is downright nasty monopolistic behaviour.

As another reader has descibed it, it is tantamount to mob racketeering --- blackmailing big business to coughup cash. The gall of this man is mindboggling. He wants a higher margin business
and thinks the world owes it to him.

-RJS

paolo.franzoi 12/5/2012 | 3:45:30 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride'
Why,

Your easements apply to cable as well. They are a "smart" content provider. So, I think your view does not wash.

seven
whyiswhy 12/5/2012 | 3:45:31 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Brooks:

Whitacre agreed to be a "dumb" path provider, not a content provider....which is why we have sucky things like utility easements embedded in our deeds...greater good for the community sort of thing.

If Whitacre wants to change the deal and be a "smart" content provider, then we have to re-negotiate.

-Why
telco1158 12/5/2012 | 3:45:35 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' "Whitacre is spinning. Nobody gets a free ride EVEN NOW..."

Amen.
paolo.franzoi 12/5/2012 | 3:45:36 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride'
Why,

Except you agreed to Utility Easements.... :)

seven
whyiswhy 12/5/2012 | 3:45:37 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Nice try Whitacre. Boofus.

Using your same logic, I should be able to charge you for running your wires and fibers across my property. Let's see, theres about 20 fibers and a big annoying junction box. I figure about $20,000 per month is fair. Afterall, I'm tired of just being a property owner.

Deal?

-Why
DoTheMath 12/5/2012 | 3:45:38 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Whitacre is spinning. Nobody gets a free ride EVEN NOW. My company sends about 100 GB per month of data, and we pay for every one of those GBs to the ISP. And the recipients of that data also pay their ISPs.

Whitacre is not talking about $19.99 end consumers. He is talking about businesses like ours getting a "free ride". Except that we are *not* getting a free ride - but are paying fees that are metered based on our usage. It has always been that way too.

What I detest about this man is his dishonesty. He runs one of the most inefficient corporations in the world, with a massively bloated cost structure, and he has the gall to tell us customers are getting a free ride.
alchemy 12/5/2012 | 3:45:39 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Rearden writes:

Now as far as this Fascists are concerned, they're trying to double bill their customers.

Paying to get online is like paying a toll to get on the freeway.


Right. And if you go 100 mph on the freeway, the Facists throw you in jail.
Rearden 12/5/2012 | 3:45:40 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' To answer your question. Everyone pays for internet access in the States.


Now as far as this Fascists are concerned, they're trying to double bill their customers.

Paying to get online is like paying a toll to get on the freeway.

What these fascists want to do is instead of charging the customer to exit to the business of choice ( since the customer has already paid Toll, he should be allowed to ), they're charging the Businesses to allow business customers to enter their Business property.

These Fasicts are very much like a Mafia organization gone amok. Their ultimate goal is to be able to track each and every website and content online so as to be able to censor those websites.

The internet is the only information medium they do not yet control, and if I were a betting man I'd say we'll see them controlling the internet in our lifetime

Upside_again 12/5/2012 | 3:45:56 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' I'm sorry but I'm really tired of hearing free internet spew. Whitacre has balls to make the stand. He will be the best in the business yet take the miminmal blame for telling free-riders to shut thier traps.

You pay 19.99 you get service. Fine. Just like a electric company, voice, water, utilty. But if you want more you will have pay for it. You use 10,000 gallons of extra water to fill your pool - you pay for it. You run 5 air conditoners in the summer - you pay extra for it. You make hundreds of extra international calls for a telemarketing campaign - you pay for it. The intial service is still the same price and you get delivery. Just know that you want the best service or product or more of it - you pay for it. That's true to all industries. Quit whinning that it should all be the best service and it be for free. You want a VW to behave like a BMW, then expect to pay the GD prices. If you want cheapie no-frill vonage - go for it. If it pukes - you got what you paid for.

The absurd notion of the free purple internet by the Pulver loving latent hippie rah-rah free-riders is garbage. Stop it before we have more Vonages all around who are doomed for failure. Worst IPO and business plan ever. Free is not going to work.
ozip 12/5/2012 | 3:45:58 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Perhaps the most accurate way of technically describing the problem is that they do not want to allow free transit through there network. However, transit isnt free, operators just dont bill each other.

This is what happens when you build the worlds biggest IP backbone without remembering that the tollgates are at the edge.....


Prediction = Usage volumes for consumer broadband in the US within 3 years.

As consumers, we will get what we pay for... but we will go through a phase where the US broadband operators use filtering and queueing techniques, some simple and some more exotic (DPI) before they realize that the cost of these solutions is high and their effectiveness is short lived. But the more significant driver is that as p2p technology becomes embeded in mainstream applications, customer will realize that they are not getting what they are paying for.

OZIP
startup_shutup 12/5/2012 | 3:46:11 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' >> As the disparity widens he says in 2005:

Pease do not quote Greenspan (the greatest SCAMSTER ... the mess he made with liquidity bubble ... resulting in home equity cashouts ... USA a giant nation of flipper ... people PIMPING houses to each other ...)
rjmcmahon 12/5/2012 | 3:46:13 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' We have this thing about how greate free market economics works, and when it works, we bring in socialistic overtones because we think the rich shouldn't get thaaaat rich.

Desi,

Not sure a free market is functioning in US telecom. In an ideal free market supply would meet demand and prices would trend to the marginal cost to produce. For bandwidth in the US this isn't happening, even by Whitacre's own comments.

Whitacre complained that Gǣsome peopleGǥ want AT&T to act as a Gǣdumb pipe that just keeps getting bigger and bigger.Gǥ

GǣThis thing is growing at a rate that nobody would imagine,Gǥ Whitacre said of the market demand for bandwidth.


The demand is there for bandwidth but supply isn't being built to meet that demand. Whitacre doesn't want to build the pipes (or tubes). Instead we get mostly empty rhetoric and complaints about video franchising, google/yahoo not paying enough, etc. etc.

Also, Greenspan on income disparity in 2000:

"The major issues that I see the United States has during this affluent period is the question of distribution of income. No society succeeds unless virtually all of its participants believe that it's fair and gives people opportunities." Jan. 26, 2000, to Senate Banking Committee.

As the disparity widens he says in 2005:

"I'm concerned about this. It's a major issue in this country," said Mr. Greenspan, who has announced he will retire in January.

"A free-market, democratic society is ill-served by an economy in which the rewards are distributed in a way" that leaves out the majority, he said. "Too many of our population ... don't feel the advantages and benefits coming from the system."
desiEngineer 12/5/2012 | 3:46:17 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' We have this thing about how greate free market economics works, and when it works, we bring in socialistic overtones because we think the rich shouldn't get thaaaat rich.

And free lunches - we don't believe there is such a thing, but we ask for it all the time.

I don't mind people bargaining down to the best price. I just don't think we want to get into a situation where things are free or too cheap - that's just a ticket to poor customer service, bad quality, and govt subsidised private sectors.

-desi
OldPOTS 12/5/2012 | 3:46:20 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Maybe the solution would be for Google to pay the network operators for every ad delivered. Reverse engineer their business plan. Then the customer doesn't pay for bad free service.

OP
paolo.franzoi 12/5/2012 | 3:46:21 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride'
Actually, just ask them to offer their services for free. Given that Google has so many ads, they should cut their rates by 50%. Then, next year they should allow you to place any number of ads for the same amount. And there should be no premium advertising.

seven
rbkoontz 12/5/2012 | 3:46:22 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Great points here. I am dead tired of the Mobys and Internet Hippies and Journalists of the world crying foul over their perfect Internet World being ruined by profit-hungry monopolistic telcos. These guys need to realize that if some business idea makes you FEEL GOOD about yourself but does not make money - then it ain't gonna be around long. Let economics and the competitive forms of broadband service drive the solution to net neutrality.

Tax the rich! Feed the poor! 10 Gig for everyone!

Get a life!
Mark Sullivan 12/5/2012 | 3:46:22 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' I think what Mr. Whitacre means when he says "no free ride" is that the companies like Vonage and Google who depend on the broadband connection will have to PAY for better/faster carriage of their products. It seems to me that one way this issue has become so confused is by introducing the consumer angle. Certainly that's part of it, but the real debate is over the possibility of companies like AT&T "pricing out" small Internet-based companies by getting in the habit of recieving large "Internet tollway" payments from bigger players like Google who can afford it. That, it's argued, might keep young, innovative companies down.
"Ill" Duce 12/5/2012 | 3:46:25 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' I get free internet.

Thanks to my neighbor's unsecured wi-fi con nection.

Don't frown at me, it's the American way!!!

Just kidding.
ethertype 12/5/2012 | 3:46:25 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' Not necessarily a good assumption, Mr. Zippy.

Broadband pricing in the U.S. could be characterized as "All you can eat for $19.95! (But we're sure counting on you to keep your actual usage way below 1%, or else our economics will get really ugly.)" Problem is, the SPs never actually said the parenthetic part, so customer expectations have been set to think "all you can eat" really is just that. Now people are starting to download 28 YouTube videos a day, not to mention all the P2P crap, and the SPs' implicit usage assumption is getting more and more wrong by the day. Meanwhile, they scramble to increase bandwidth, so that even more people can watch skateboarders castrating themselves in high-def, but still don't take the opportunity to rethink the all-you-can-eat pricing.

In Europe and in Canada, most of the SP's woke up over the past year or two, said "Gee, we better tell people what we REALLY meant about usage," and implemented monthly download quotas geared to limiting the heaviest users. U.S. ILECs and Cable MSOs are so deathly afraid of doing anything that might put them at a competitive disadvantage against each other that most of them haven't followed suit yet (Cox is the only major one that has). Instead, they whined about "people using the pipes for free", inadvertently provoking all sorts of paranoid speculation about blocking and favoritism, and then had to backpedal so far that they're now more scared than ever to bring up something as unbiased and obviously fair as simple usage quotas. It'll happen, but we might see a few more wrong turns before we get there.
mr zippy 12/5/2012 | 3:46:27 AM
re: AT&T's Whitacre: 'Nobody Gets a Free Ride' and the telcos are charitable organisations ?

I ask because down here in Australia, we pay our ISP for access to their network, and assume that as competent business people, they'd ensure they're charging enough money to not go out of business, make a profit, and ensure that they are also charging enough to allow them to grow their network as they need to increase it.

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