Friday, May 12, 2006

"Is AT&T's Whitacre playing politics with IPTV for low income households?"

A reader points me to a recent blog entry on ZDNet that asks whether AT&T's Whitacre is playing politics when it announces that it will be serving 5.5 million low income households with Lightspeed, its IPTV/data project. (Thanks, reader!) Lightspeed is what any new phone company upgrade in Lafayette will be called after AT&T acquires BellSouth.

Of course AT&T's playing politics.

The ZDNet reporter does the first thing that is necessary to interpret a teleco's public pronouncments: he asks how the company thinks it will benefit from what it is saying rather than simply repeating their carefully crafted words.

Articles in the last few days have uncritically reported Whitacre's remarks before a group in Detroit without putting the remarks into any context which might make them meaningful. There's both state and local contexts which should be taken into account.

First, AT&T is funding a huge battle in Michigan to put in a state-wide video franchising law similar to the one it is pushing Louisiana. In Michigan the Michigan Municipal League (MML) has fought back vigorously, staging events and developing coalitions over the last several months. Muncipalities representing over 60% of Michigan's population have passed resolutions condemning the law and AT&T has responded with platoons of lawyers and local advertising. The issue in Michigan is the same as in Louisiana--resisting the state taking of local property and outrage at the clause which would allow AT&T to serve only the wealthiest parts of the community.

AT&T is being given a painful and damaging black eye in the state as MML hammers home the point that AT&T has promised its investors that it will only offer the service to 5% of "Low Value" customers while it will offer it to 95% of "High Value" ones. "Low value" has been defined as those spending less that $110 dollars a month on communications services. A close look at AT&T's own numbers show that it only plans to serve about 52.5% of its current customer base with the new service. Nobody in rust-belt Michigan, or depressed Cleveland misses the point--places with contracting economies, neighborhoods that are not wealthy, and rural areas with their low population density are being written off. AT&T is not going to waste their time with those guys and it wants to make sure that local governments don't make serving local communities an all or nothing proposition as current franchise agreements require.

So Whitacre is not just playing politics; he is doing damage control. It has also got personal in Michigan. The Michigan Municipal League has demanded that Whitacre himself tell Michigan communities why he is not responding to their requests for competition and staged an embarrassing event to coincide with the Whitacre's speech to highlight their positions. A press release from the MML reported that:
As Whitacre spoke, a 10-foot-tall, 20-foot-wide mobile billboard circled outside The Masonic Temple in Detroit with the message "AT&T: Why won't you call us back? -- Michigan's communities."
To read the mainstream press's account of the speech you'd think that nothing was going on in Michigan -- or outside the doors of the club where the speech was held -- that could have promted Whitacre's concilatory remarks.

But that's not nearly all. Whitacre's AT&T is also being hammered on the national level by Rep. Dingell of Michigan who painfully forced Whitacre to respond in writing to the charge that AT&T has no intention of actually entering into franchise agreements--and forced the company to restate their belief that their new project Lightspeed is an information service which by federal mandate is not subject to state law. (So why ask for a franchise bill at all? For the same reason that such bills are being driven through legislatures by the Bells across the country: to make sure that local municipalities don't force them, as they currently force the cable companies, to serve all the people of the community in order to get permission to run their lines through the public's property.)

Whitacre would also love to placate Michigan's Dingell, if that is possible. Saying the right thing in Michigan right now is actually important.

Is Whitacre playing politics? Of course he is playing politics.

In Michigan and in Lousiaina...and in South Carolina, and in Illinois, and in the halls of Congress. That's what the phone companies do.

(As I get ready to post this I've run across an article that expresses similar sentiments on Broadband Reports. Bove's doubts are more historical than mine and an interesting contrast.)


Shad Price said...

Great article John! I think that it's important to show people the type of company Lafayette is dealing with and how nefarious the people associated with this company can be in order to protect their bottom lines and own self-interests.

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