Congress Must Act on Network Neutrality, AT&T CEO Says
As individual US states move ahead on their own network neutrality laws, it's increasingly imperative for Congress to move and develop federal legislation that applies from sea to shining sea, Randall Stephenson, AT&T's chairman and CEO, said Tuesday at the Goldman Sachs Communacopia Conference in New York.
"They [Congress] really do need to act," he said, calling consumer data privacy rules the most pressing area today.
While it's important to create and codify rules around customer data use, it's likewise "important that it not be done 50 different ways by 50 different states," Stephenson said. "I don't even know how companies like ours or Google or Facebook … operate in an environment like that. The need for legislation is pressing." (See California Streamin': State Gets Tough on Net Neutrality .)
He said one set of national laws is important in part because the pendulum on network neutrality has swung wildly from one presidential administration to the next. Rules set up during the Obama administration have since been rolled back at the FCC during Donald Trump's White House stint.
Stephenson also suggested that the nation also needs "one cop on the beat," arguing that the Federal Trade Commission ought to helm it, rather than including additional involvement by the Federal Communications Commission (FCC) .
"If we don't take this one, it becomes a constraint on capital investment, it becomes a constraint on business model developments," he said.
Direct-to-consumer a critical video component
With HBO and other Time Warner properties now under its wing, Stephenson noted that it's also critical that AT&T Inc. (NYSE: T) steps up its ability to go direct-to-the-consumer and fulfill its plan to become a "modern media company."
"If you're going to own premium content, we think it's imperative that you have direct-to-consumer capabilities," he said.
Speaking of premium content, Stephenson is confident that AT&T will prevail as the U.S. Department of Justice appeals the order on the Time Warner acquisition. The judge's order "revealed the weaknesses in the [DoJ] case," he said. "They have to overcome the judge's order … We feel very good on where we stand on appeal." (See FCC Gives DoJ a Boost in Appeal Against AT&T-Time Warner Merger.)
At the same time, he said the litigation had "been one of the most distracting things for a business that I have run in my career," and that it did hurt the company for a while as business plans and integration efforts came to a "grinding halt."
But that's all in the lawyers' hands now. "We are now about executing," he said.
AT&T is handling the distribution part of its strategy with traditional pay-TV services as well as with two new virtual MVPD offerings -- DirecTV Now and AT&T WatchTV, a new skinny bundle offering with more than 30 live channels (sans local broadcast networks) and a VoD library being offered for free to customers on its unlimited wireless plans and for $15 per month as a standalone.
Most media companies grew up almost exclusively on wholesale models, he pointed out. While wholesale relationships will remain important in the years ahead, they likewise become "stressed," causing media companies to "go aggressively at getting directly to the consumer," Stephenson said.
He said another major pillar is scaling the ad model, noting that the addition of Turner's stable of networks amplifies AT&T's ad inventory and that the ad-tech side will be partly driven by its $1.6 billion acquisition of AppNexus. (See AT&T Buys AppNexus, Charts Ad Strategy.)
Stephenson is bullish on the OTT products, noting that AT&T WatchTV, as currently structured, is already a profitable product. DirecTV Now subs have "been very resilient" to a recent price increase amid the addition of more channels, a move that was softened by new features such as a cloud DVR.
Another key piece is the distribution network, as satellite, fiber and mobility will be "key to all of this," he said.
On the mobility side, he noted that AT&T will be preparing cell sites for 5G deployment as it moves ahead on its FirstNet contract awarded by the government. (See AT&T on Track With 5G, Starts FirstNet Build.)
He also reiterated that AT&T will go with its "5G Evolution" strategy -- effectively a software upgrade to its 4G LTE network that results in faster speeds -- as it waits on fully standardized handsets, software and other 5G technologies.
AT&T expects to have about half of the US population covered by its 5G rollout by the end of the first quarter of 2019. "Everyone is in a race and a push to get [to 5G]," he said. "2020 is when you'll really start to see 5G scale."
— Jeff Baumgartner, Senior Editor, Light Reading